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AUTHOR Isaacs, Julia B.; Garet, Michael S.; Sherman, Joel D. TITLE Strategies for Collecting Finance Data from Private Schools. Working Paper Series. INSTITUTION Pelavin Research Inst., Washington, DC.; National Center for Education Statistics (ED), Washington, DC. REPORT NO NCES-WP-96-16 PUB DATE 1996-06-00 NOTE 182p. PUB TYPE Reports Research (143) EDRS PRICE MF01/PC08 Plus Postage. DESCRIPTORS Budgeting; Comparative Analysis; *Data Collection; *Educational Equity (Finance); *Educational Finance; Elementary Secondary Education; Expenditure per Student; Expenditures; Parochial Schools; Private Education; *Private Schools; *School Funds
ABSTRACT Relatively little is known about private school finance in the United States. Since this lack of data impoverishes educational policy discussions that compare public and private schools, a strategy, was developed to collect finance data from private schools. High-quality data can be used to determine the total amount spent on elementary and secondary education in the United States, and can inform debates on the relative cost per student of various approaches to educational service delivery. The report focuses on the extreme diversity among private schools and the strategies needed to develop accurate data in the face of such diversity. The text looks at the existing data on private school finances, major components of expenditures, and implications of data collection. It surveys the types of expenditures found in 28 private schools, taking care to articulate expenditures related to instruction-related activities, administration, physical plant, and other services. The report also describes some administrators' reactions to the finance survey, including initial resistance by some and a listing of the potential benefits of such a survey. Some of the implications of the data collected, including a proposed framework for organizing the survey statistics, are presented. Four appendixes include: three survey instruments and a table showing schools in focus groups and site visits. (RJM)
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Strategies for Collecting Finance Data from Private Schools
Working Paper No. 96-16 June 1996
Contact: Stephen Broughman Surveys and Cooperative Systems Group (202) 219-1744
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Suggested Citation
U.S. Department of Education. National Center for Education Statistics. Strategies forCollecting Finance Data from Private Schools, Working Paper No. 96-16, by Julia B. Isaacs, Michael S. Garet, Joel D. Sherman.Stephen Broughman. project officer. Washington, D.C.: 1996.
June 1996
BEST COPY AVAILABLE 3 Foreword
Each year a large number of written documentsare generated by NCES staff and individuals commissioned by NCES which provide preliminary analyses ofsurvey results and address technical, methodological, and evaluation issues. Even though theyare not formally published, these documents reflecta tremendous amount of unique expertise, knowledge, and experience.
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To receive information about submitting manuscriptsor obtaining copies of the series, please contact Suellen Mauchamer at (202) 219-1828or U.S. Department of Education, Office of Educational Research and Improvement, National Center forEducation Statistics, 555 New Jersey Ave., N.W., Room 400, Washington, D.C. 20208-5652.
Susan Ahmed Samuel S. Peng Chief Mathematical Statistician Director Statistical Standards and Methodology, Training, and Customer Services Group Service Program
iii
4 Strategies for Collecting Finance Data
from Private Schools
Julia B. Isaacs Michael S. Garet Joel D. Sherman
Assisted by Scott Branco lini
June 1996
Pelavin Research Institute 1000 Thomas Jefferson Street, NW, Suite 400 Washington, DC 20007
5 TABLE OF CONTENTS
Foreword iii
CHAPTER I: INTRODUCTION I -1 The Rationale for a Private School Financial Data Collection 1-3 The Design and Organization of the Study 1-5
CHAPTER II: LITERATURE REVIEW: THE ENVIRONMENT OF PRIVATE SCHOOLING II-1 Existing Data on Private School Finances II-1 Sources of Data on Public Schools and Postsecondary Institutions 11-4 The Environment of Private Schooling: Implications for Data Collection 11-7 Major Components of Expenditures 11-21 Conclusion 11-43
CHAPTER III: TYPES OF EXPENDITURES FOUND IN 28 PRIVATE SCHOOLS III -1 Introduction III -1 Diversity of Schools in Our Sample 111-4 Instruction-Related Activities III- 1 0 Administration 111-22 Physical Plant III -31 Other Services 111-4 1 Conclusion 111 -51
CHAPTER IV: REACTIONS OF ADMINISTRATORS TO FINANCE SURVEY . IV-1 Resistance to the Survey IV -1 Potential Benefits from Survey IV-5 Ways to Interest Administrators in the Survey IV-8 Conclusion IV-12
CHAPTER V: IMPLICATIONS FOR THE DESIGN OF A DATA COLLECTION STRATEGY V-1 Diversity and the Collection of Financial Data V-2 A Proposed Framework V -13 Examples of Possible Data Collection Instruments V-20 Next Steps V-23
REFERENCES R -1
Appendix A: Private School Finance Survey-A A -1 Appendix B: Private School Finance Survey-B B -1 Appendix C: Private School Finance Survey-C C-1 Appendix D: Schools in Focus Groups and Site Visits D -1
vii LIST OF TABLES
Table 2.1 School Size 111-6
Table 2.2 Grade Level 111-6
Table 2.3 Affiliations 111-8
viii CHAPTER I
INTRODUCTION
Relatively little is known about private school finances in the United States.In many other countries, the national government collects and reports on educational expenditures in both public and private schools. In the United States, detailed information on public school expenditures is collected by both the National Center for Education Statistics (NCES) and the
Bureau of the Census, but there is no comparable collection of financial data from private elementary and secondary schools.
A lack of basic data about private school finance impoverishes the education policy discussions that compare public and private schools, evaluate options for increasing public support to private schools, or assess the contribution of private schools to the overall system ofelementary and secondary education. Without solid data on private school expenditures, it is difficult to examine trends in total educational spending in the United States over time, or to compare total education spending in the United States and other countries.
We embarked on the study reported here to develop a strategy for the collection of finance data from private schools. At least in principle, fmancial data on private schools might take a wide variety of forms, differing in purpose and complexity. Almost certainly, a full financial data collection effort would involve data on both revenues and expenditures. Although both revenue and expenditure data are likely to serve important purposes, we give most of our attention in this report to the collection of expenditure data.
For both revenues and expenditures, data might be collected at various levels of detail. At the most aggregate level, one might collect data on the total annual revenues and total annual expenditures by private schools, without attempting -to determine either the sources of revenue
I-1 (e.g., tuition or gifts), or the types of expenditures (e.g., expenses oninstruction, administration, or buildings and grounds). At the opposite extreme, one mightcollect data on a quite disaggregate set of revenue and expenditures categories (forexample, distinguishing among instructional salaries, instructional benefits, instructional supplies, andinstructional services).
In addition, data collection strategies might differ in bothsample size and in the frequency of data collection. For example, data might be collected onthe full population of private schools, or instead on a much smaller sampleselected to provide reliable estimates at the national or regional level, but not for specific types of religious ornon-sectarian schools. Data might be collected on a frequent basis (for example, every twoyears), which would provide an up-to-date basis for schools interested in comparing their revenues andexpenditures with other schools. Or, data could be collected much less frequently (perhaps everyfive or ten years).
To succeed in gathering high-quality data, a data collection strategy musttake into account the substantial diversity among private schools. Privateeducation in the United States is extremely varied. Altogether there are about 26,000 privateelementary and secondary schools in the United States, enrolling about 4.9 million students(NCES, 1994). Some schools enroll fewer than 50 students and have annual budgets under$100,000. Other schools enroll more than 500 students and have annual budgets exceeding $5 million.Some schools are closely affiliated with local churches or synagogues and share both staff andfacilities with their affiliated organizations.
Other schools are completely autonomous and operate asindependent not-for-profit or for-profit
organizations. Some schools have simple administrative structures,including perhaps a
headmaster and a part-time secretary; others have elaborateorganizational structures, including
separate offices of academic affairs, student recruitment,development, and business. Some
schools were founded within the past few years and are stillin the process of developing institutional routines and procedures. Others were founded decades orcenturies ago and have rich and well-established institutional identities.
The diversity among private schools is a central theme of our report.The substantial variation across schools in size, organization, and mission is clearlyaccompanied by similar variation in revenues and expenditures, and understanding this variationforms one key element of the rationale for collecting new data. In addition, the variationin organization across schools has heavily influenced the strategy we have taken in developing adata collection strategy.
The Rationale for a Private School Financial DataCollection
High-quality data on private school finance can be expected to serve awide variety of purposes, and such data are likely to be ofinterest to a number of major audiences and constituencies, including private school administrators and teachers, the parentsof students enrolled in private schools, educational policy-makers, and researchers.The four examples that follow illustrate some of the kinds of questions improved data on privateschool finance, collected
at different levels of detail, might help address.
First, aggregate data on the amount spent by private sahools can be used todetermine the
total amount spent on elementary and secondaryeducatiOn in the United States. One measure of
the commitment to education is the total amount spent, expressed bothin dollars per student and
as a percent of the gross national product.To the extent that data on total expenditures ignore (or
mis-estimate) the contribution of private schools, such data may providemisleading information
on trends in investment in education overtime, as well as misleading comparative information on
investment in education in the United States and other countries.
Second, data on total spending at the school level can contribute todebates on the relative
cost per student of various approaches to thedelivery of educational services. While data are
1-3 10 currently available on per-pupil expenditures in public schools, only limiteddata are available on the differences in average per-pupil spending between public andprivate schools. Furthermore, the limited data available indicate substantial variation in per-pupilspending across various types of private schools. Without more complete information on spendingin different types of schools, simple statements about average per-pupil expenditures in privateschools (or average public- private differences) are likely to be quite misleading. Furthermore, validdata on per-pupil expenditures for specific types of private schools can serve as"benchmarks" to help private school administrators and parents compare spending in theirschools with spending in other, similar schools.
Third, fine-grained expenditure data can improve our understanding ofthe components of educational expenditures for example, spending on instruction, administration, and building operations and maintenance. To the extent per-pupil expenditures differ across typesof private schools (and, to the extent they differ between public and privateschools), it is critical to understand how these differences occur. In some cases, differences mayreflect differences in accounting practices rather than real differences in spending, and data on the componentsof expenditures may help sort out complexities that should-be -taken into account to putschools on a common footing. For example, if some privateschools include financial aid as a regular expenditure in the operating budget, while other private schools include it as areduction in revenue, a simple comparison of expendituresis likely to be misleading. Similarly, if schools that
rent their facilities typically include rent payments in theiroperating budget, while those that own
their facilities typically do not include mortgage payments, a simplecomparison across schools is
likely to be misleading. In addition, data on components of expenditures mayprovide useful
"benchmark" information for administrators and parents interested in understandinghow
1-4
11 expenditures for particular components of education (administration, or building operations and maintenance) differ across schools.
Finally, when linked with data on other aspects of private school organization (for example, data on services provided, curriculum, and student achievement), expenditure data may provide crucial information on the role of resources in education. Recent debates have focused considerable attention on public-private differences in organization, curriculum, and achievement, but little is known about the way resources are used in private schools or the cost-effectiveness of various ways of organizing educational service delivery. Data that links expenditures at the school level with program provision and student outcomes would permit both school staff and policy makers to assess the implications of alternative resource allocation strategies.
These four sets of rationales for financial data collection are not exhaustive, but they lay out the types of purposes that might be served by various kinds of school finance data. Clearly, some purposes would require much more time-consuming, detailed, andsophisticated data collection efforts than others. Furthermore, some purposes would require larger samples or more frequent data collection than others. And, some would raise more complex issues of comparability across schools. These and related issues are considered in some depth in the chapters that follow.
The Design and Organization of the Study
Given the pronounced variation among private schools, any data collection strategy, if it is to succeed, must be grounded in a close understanding of the organizational structures, budgetary arrangements, and accounting practices of private schools. Thus, in the exploratory study reported here, we sought to obtain detailed information about private schools, relying on several sources of data.
1-5 12 First, we conducted a review of the available literature on private schools. This review, which is presented in Chapter II, focuses in particular on the literature describing the organizational and institutional context in which private schools operate. We also examined the surveys used by a number of private school association to collect financial datafrom member schools, including the National Association of Independent Schools (NAIS), the Lutheran
Church Missouri Synod (LCMS), the National Catholic Education Association NCEA), the
Association of Waldorf Schools of North America, and the American Montessori Society. in addition, we reviewed the accounting handbooks used by several private school organizations, including NAIS and the General Conference of Seventh-Day Adventists. Finally, we examined the strategies used by NCES and the Bureau of the Census to collect financial data for public elementary and secondary schools and public and private postsecondary institutions.
One conclusion of our literature review is that the available accounting handbooks and survey forms used to collect financial data from public and private educationalinstitutions vary along a number of dimensions, including the level of detail involved, the types of information requested, and the frameworks used to classify types of revenues and expenditures. We discuss this variation Chapter II, and then return to the issue in developing a set of-recommendations for data collection in Chapter V.
Following the literature review, we engaged in a two-phase effort to interview private school administrative staff about their school budgeting and accounting practices, as well as about their views concerning a possible national data collection effort.In the first phase, we conducted three focus groups, each attended by a number of private school administrators. Then, we conducted case studies of 16 private schools in the greater Washington, DC, area. The detailed results from the focus groups and case studies, which form the core of our report, are presented in
Chapters III and IV. Finally, in Chapte. V, we discuss the implications of our studyfor the development of a data collection strategy.First, we examine some conceptual issues that must beaddressed to permit a valid comparison of expenditures acrossdifferent types of private schools and valid public-private comparisons. Next, we propose a frameworklaying out the main expenditure categories for data collection. Then, we discuss threepreliminary data-collection instruments based on the proposed framework each serving a somewhat different purpose and designed to collect data at a somewhat different level of detail.Finally, we consider some of the steps-that would need to be taken to move toward a successfulprivate school finance data collection effort. CHAPTER II
LITERATURE REVIEW: THE ENVIRONMENT OF PRIVATE SCHOOLING
In this chapter, we survey the relatively small literature on private schoolfinances. The first section of this chapter assesses the existing data on private school finances.The second section describes the approaches used to collect data from public elementaryand secondary schools and both public and private postsecondary institutions. The third sectiondiscusses how the institutional context of private schools may affect efforts to collectadditional data. The final section considers issues relating to the basic components (salary, supplies,capital, etc). of a survey of private school expenditures.
Existing Data on Private School Finances
During the late 1970's, the National Center for Education Statistics (NCES) conducted a series of private school surveys to collect data on private elementary and secondaryschools. A
survey of nonpublic elementary and secondary schoolsconducted for three successive years
between 1976-77 and 1978-79 included a short chart asking schools to report income and
expenditures for current operations and auxiliary (non-academic) operations.The survey resulted
in estimates of about $5.5 billion in current operating expenditures in both 1976-77and 1978-79
(McLaughlin & Wise, 1980). NCES has extrapolated from this figure to estimate totaloperating
costs (current operating expenditures plus capital costs) in1991-92 of over $20 billion.
McLaughlin and Wise (1980) view the finance items as the least reliable measures intheir
survey. The response rates for questions on incomeand expenditures were lower than the response rates for most other questions only 51 percent of respondents reported total current operating expenditures.
An additional problem with the data from the 1970's is that asignificant number of private schools, particularly small, independent ones, were missing from thesampling frame. Since 1983,
NCES has attempted to address the problem of undercounting privateschools in national surveys by combining commercial lists and national lists with an area searchlist, developed by searching for private schools in certain areas. In 1985-86, Westat, Inc. administered a surveyto a sample of private schools and teachers drawn from the 1983-84 list. Although this surveydid not collect direct expenditure information, it did include questions on tuition and teachersalaries, as well as on the use of volunteer labor and participationin public programs (Westat, 1987).
Currently, the National Center for Education Statistics collects data from privateschools through the Private School Universe Study (PSS), conducted in alternate yearssince 1989-90, and the Schools and Staffing Survey, conducted every third year since 1987-88.The former survey is limited to collecting basic data on enrollment, staffing, program and religiousorientation from the universe of private elementary and secondary schools (Broughman, Bynum, & Stoner,1994). The
SASS collects a richer set of data from a sample of private-and public schools, but the only finance questions on the survey concern teacher and administrator salaries, benefits, andtuition
(McLaughlin, O'Donnell & Ries, 1995). The 1991-92 PSS and the 1990-91 SASS are the source of much of the quantitative data presented in this chapter.
An additional source of data on private school finance is information collected by someof the national associations of private schools. Three associations, in particular, theNational
Catholic Education Association (NCEA), the Lutheran Church-Missouri Synod (LCMS), and the
National Association of Independent Schools (NAIS), regularly collect expenditure data from their member schools. Together, these three associations account for 43 percent of the 26,000 private
II-2 16 schools in the United States, including 8,889Catholic schools, 1,086 Lutheran schools in the
Missouri Synod, and 1,188 NAIS schools that are notCatholic or Lutheran. Garet, Chan and
Sherman (1995) used data from these three sectors toestimate total expenditures (operating expenditures plus capital) for the universe of privateelementary and secondary schools as between
$18.1 billion and $19.4 billion and per-pupil operatingexpenditures of $3,350 to $3,600. Their estimates of total expenditures fall 4 to 10 percentbelow the NCES estimates of over $20 billion based on the 1975-1979 data.
As Garet et al. discuss, their estimates aresubject to uncertainty for several reasons.First, there are some questions about the quality andinclusiveness of the expenditure data submitted by school officials in response to the mailed surveysof the three associations. Second, the estimates from the Catholic sector are based on samples ofschools rather than the universe, and so are subject to sampling error, as well as selection bias becauseof response rates well below 100 percent. Finally, and probably most significantly,57 percent of private schools do not belong to the three associations that collect expenditure data, and sothe estimates for over half the private
school universe had to be imputed using data from thethree associations (adjusted for school
level, size and region). Neither the estimatesextrapolated-from the private school associations,
nor the national estimates extrapolatedfrom the 1975-1979 data, can be relied upon for a
comprehensive and reliable measure of aggregate spending onprivate elementary and secondary
schools.
In addition to the national surveys of private schoolexpenditures, there have been a few
efforts by researchers to collect data from a smallsubset of private schools. For example, Cooper
(1994) analyzed expenditures of three private schoolsin considerable detail, comparing the
allocation of resources in these schools with allocationsin over 420 public schools in eight public
11-3 1i school districts. While his findings suggest interestingdifferences in public and private school expenditure patterns, it is hard to generalize from a sampleof three schools.
In general, researchers studying private schools do not appear tohave focussed much on expenditures, other than analyses of the differences in salariesof public and private school teachers. Much of the recent research on teacher salaries usesdata from the SASS see for example, Chambers (1995) and Ballou and Podurgsky(1995a, 1995b) and the lack of research in other areas of private school finance may reflect thelack of a good data set with expenditure data and the difficulty of collecting additionalprimary data.
In summary, research on private school financeis limited by outdated expenditure data, incomplete data that are drawn from private school associationsrepresenting less than half of the private school universe, detailed data drawn from a fewselected schools, or national data that are limited to tuition and salary information. The existingdata do not allow researchers to state total spending on private schools with confidence, compareexpenditures for different activities across public and private schools, or compare overall expenditures acrossdifferent sectors of private schools. Additional data collection is needed to meet these purposes.
Sources of Data on Public Schools and PostsecondaryInstitutions
In designing a strategy to collect data on private schoolfinances, it may be useful to build on the experience of collectingfinance data in other sectors of education. In particular,the
National Center for Education Statistics (in conjunctionwith the U.S. Bureau of the Census)
administers annual finance surveys to obtain data on elementaryand secondary revenues and
expenditures at the state and district levels, as well as surveysof revenues and expenditures of
both public and private postsecondary institutions.In this section, we provide a brief overview of
these surveys. Then, in later sections, we examinethe extent to which strategies for collecting
II-4 18 finance data must be modified to reflect the organizational andinstitutional context of private elementary and secondary schools.
The National Public Education Finance Survey
The National Center for Education Statistics (NCES) routinelyobtains data on public elementary and secondary school finance through two surveys.The first of these the National
Public Education Finance Survey (NPEFS) is designed to gather annual data on total revenues and expenditures on education for each state. Each statedepartment of education completes the
NPEFS by drawing on data it collects from local schooldistricts and state government records.
The states are responsible for compiling the data fromthe districts and putting the data into a format that can be submitted to NCES and aggregated into nationaltotals of public school revenues and expenditures. Althoughthe data are drawn from school districts across the country,
state officials are urged by the NCES to make thedata as comparable as possible by following the revenue and expenditure classificationsoutlined in the NCES accounting handbook, Financial
Accounting for Local and State School Systems. 1990 (Fowler,1990).
The NPEFS collects detailed financial information across a matrixof functions and
objects.There are five major types of services and activities, called functions:(1) Instruction
services, (2) Support services, (3) Non-instructional services,(4) Facilities acquisition and
construction services, and (5) Other uses (debt service). Underthe broad function of "Support
services" are nine subfunctions, including student support,instructional support, general
administration, school administration, business support, operationand maintenance, transportation,
central support, and other. The second dimension ofthe matrix distinguishes among different
types of expenditures, called objects, includingsalaries, fringe benefits, purchased services, tuition
(paid to another district), supplies, property, and other.Operating expenditures are reported
separately from long-term capital expenditures. Revenues arereported by source, including local, intermediate, state, Federal, and other. (NCES,1992; Sherman & O'Leary, 1993; Vitullo-Martin,
1991).
The Annual Survey of Local GovernmentFinances
The second source of data on public schoolexpenditures is the Annual Survey of Local
Government Finances (ASLGF) form F33, administeredby the U.S. Bureau of the Census as part of its routine survey of local government finance(U.S. Bureau of the Census, 1993). The survey of local governments collects data on the universeof local school districts at least every five years, and on a sample ofdistricts in other years. The specific revenue andexpenditure categories used in the F33, like those used in the NPEFS, arebased on Financial Accounting for Local and
State School Systems (1990). But the two formsdiffer in some details. The F33 collects somewhat more detailed information on revenues, andsomewhat less detailed information on expenditures than does the NPEFS. In particular, theF33 does not request information on each cell in the full function by object matrix describedin Financial Accounting.
Although form F33 is designed to gather informationabout finance at the district level, the
U.S. Bureau of the Census generally obtains thedata from state Departments of Education rather than directly from the districts themselves. State.Departments of Education -provide the requested information based on data routinely gathered from the districtsin the course of each state's annual planning and reporting cycle. This considerablysimplifies the data collection effort and helps insure consistency in reporting.
The Integrated Postsecondary Education DataSystem
In addition to data on public elementary andsecondary school finance, NCES routinely
obtains financial data on postsecondary institutions.These data are gathered by the U.S. Bureau
of the Census, using an annual survey conducted as partof the Integrated Postsecondary
Education Data System (IPEDS). (See NCES, 1994d.)The IPEDS financial surveys are
11-6 20 administered to both public and private postsecondary institutions, including two-year and four- year colleges. The specific categories of revenueand expenditure information requested on the
IPEDS questionnaires are drawn from the Financial Accounting and Reporting Manualfor Higher
Education (1990), published by the National Association of College and UniversityBusiness
Officers (NACUBO). Unlike the NPEFS, the IPEDS data collection does not attempt toobtain expenditure information on a full function by object matrix. Instead, the primary focusis on
,) functional categories (instruction, research, public service, academic support, studentservices, institutional support, plant operations and maintenance, and scholarships andfellowships). Within functions, the only object for which data are obtained is wages andsalaries.'
The Environment of Private Schooling: Implications for Data Collection
Data collection from the private sector is likely to differ from public data collection efforts through the NPEFS, F33 and IPEDS because of institutional differences between private and public schools. Furthermore, there are significant organizational differences among different types of private schools that can affect the way finances are accounted for and reported. In these section, we examine some of the major characteristics of private schools that may affect data collection. First, we consider some of the principal dimensions on which private schools and public schools differ: for example, the legal environment, culture, and organizational structure.
Then, we consider differences in characteristics across sectors of the private school universe,
'NCES is currently revising the IPEDS financial data collection forms to reflect the recent changes in accounting standards for not-for-profit organizations adopted by the Financial Accounting Standards Board. The new forms are expected to be used for the first time for the data collection for the 1995 FY. giving particular attention to the ways these differences may introducechallenges in collecting comparable data across sectors.
The Institutional Context of Private Schools: Implications for DataCollection
Legal Environment. Regulation of private schools is primarily the domain of state and local governments, and these regulations vary across states and localities(Cookson, 1989;
Encamation, 1983; van Geel & Crampton, 1991; Hirschoff, 1986). Regulationsalso differ for not-for-profit and for-profit schools, and, in some states, differ for religious andnon-sectarian private schools (Hirschoff, 1986).
Most states require private schools to register and report enrollment, but eventhis minimal requirement is not always strictly enforced (Erikson, 1986). Few states regulate the governance structure of private schools (such as the composition or power of theprivate school board), and, in fact, many states allow private schools to remain unincorporated (Hirschoff, 1986).
Private schools do not face many legal requirements regarding reporting of financial activities. The federal government requires non-profit, independent schools to file annualforms
(Federal Tax Form 990) as tax-exempt organizations, but this requirement does not apply to any school affiliated with a church or operated by a religious.order. (Smith, 1991; IRS,1995). Most state governments do not require any non-profit schools to file financial reports,exempting them from the requirements of other non-profit organizations because of their educational status(Smith,
1991; Gross et. al, 1995). Proprietary independent schools are required to file federal and applicable state tax reports.
Culture and Organizational Structure. The ability and willingness of privateschool administrators to complete a survey collecting data on finances may be influenced bytheir
schools' culture and organizational structure, as well as the legal environment. Tobriefly
summarize the large body of literature comparing the organization of public and privateschools, the major difference, as articulated by Chubb andMoe (1990), is that public schools have developed centralized bureaucratic structures in response tothe direct democratic control of schools, while private schools have remained autonomousin response to control by market forces.
Other researchers emphasize the large size ofpublic schools versus the small size of private schools (Conway, 1994); the difference betweenbureaucratic relationships and familial or village- like communitarian relationships (Erikson,1994); and the contrast between Weberianrational- legal/bureaucratic authority and traditional authority(Salganik & Karweit, 1982; Talbert, 1988).
Although the researchers use somewhat differentterminology and methods, they appear united in describing a private school organization and culturethat is less formal than that of public schools in terms of structured rules and record-keeping.
Although private schools are less accountable togovernmental authorities than public schools, they are accountable to parents (and donors) towhom they are dependent for continued financial support (Levy, 1991). Although they may not reportfinancial data to centralized organizations, they have powerful reasons for tracking costsinternally, namely, their economic viability. Operating in a market environment, a school mustbalance its budget if it is survive economically. To some extent, the market environment maylead some private schools to adopt more formal budget proceduresthan the communitarian image of private schools mayimply.
Increased attention has been paid to budgetary concerns overthe past decade or so, as a range of private schools, from Catholic schools to elite prepschools, have faced increasing financial hardship (Moulton, 1992; Aitken, 1994; Harris,1995).
When discussing the organizational structure ofpublic and private schools, it is helpful to
distinguish between centralized or district-leveladministration and school-level administration.
Cooper (1994) explains that many of the centralizedfunctions that transpire at the district level in
public schools take place at the school site inprivate schools. In a comparison of the
11-9 23 administrative structures of public and private schools in the SanFrancisco Bay Area, Scott and
Meyer (1990) found that private school districts (in this case,Catholic diocesan districts) had fewer staff at the central office than did public schools, but theadministrative staff at the building level was, in fact, larger in private than in public schools. Analysesof the 1990-91 Schools and
Staffmg Survey also show that there are more administrativestaff per teacher in private schools than in public schools (Baker et. al., 1995).
Aitken (1994) reports that the median ratio of administrative expensesto total expenses is
15 percent across most types of independent schools thatbelong to the 'National Association of
Independent Schools. In his analysis of school resource allocation,Cooper (1994) distinguishes between institutional administration, or management of the business,non-educational dimensions of the school, and the school-site administrative activitiesassociated with managing the teaching staff and running the school. In his study of three schools,spending on institutional administration ranged from 2 percent of total spending in a Catholic highschool run by a private order to 14 and 15 percent of total spending in two non-sectarianprivate schools. School-site administration accounted for 5 to 6 percent of total expenditures in the twonon-sectarian schools, and 11 percent in the private-order high school. Total administrative costs werethus 20 percent in the two non-sectarian schools, and 13 percent in the Catholic school.
Business Offices in Private Schools. One important function of theadministrative staff in private schools is to manage the financial operations of the school. The presenceof separate business offices and development offices in private schools appears to varysignificantly by type
of school. According to responses from association members, 15 percentof Catholic elementary
schools reported employing a full-time or part-time development officer(Kealey, 1994); 24
percent of Lutheran schools associated with the EvangelicalLutheran Church of America reported
having a financial development officer (Evangelical Lutheran Churchof America, 1993); and 86 percent of diocesan high schools, 91 percentof parish high schools, and 96 percent of Catholic private order high schools reported having a development office(Guerra, 1995).
According to statistics from the National Association of IndependentSchools (NAIS), the percentage of NAIS schools with a business officersranged from 58 percent of schools with 200 or fewer students, to 88 percentof schools with more than 700 students. Overall, 77 percent of
NAIS schools reported having a business officer. About eight percentof the business officers surveyed also had teaching duties (NAIS, 1993).
In the substantial number of private schools without a separatebusiness office, the expenditure information is often the responsibility of a secretary,bookkeeper or accountant.
According to the same Catholic and Lutheran surveys cited above,96 percent of Catholic elementary schools have a school secretary, and 88 percent of evangelicalLutheran schools have an accountant or bookkeeper (Kea ley,1994; Evangelical Lutheran Church of America, 1993).
The Lutheran survey also reports that 78 percent of these small Lutheranschools have their financial records audited annually, and that 81 percent of the schools have computersfor administrative or teaching purposes, with a median of 2 computers foradministrative use
(Evangelical Lutheran Church of America, 1993).
Some of the business operations of a school can be contracted out to anexternal party.
Van Geel and Crampton (1991) report that 18 of the 30 schools whoresponded to their survey of private schools in New York state subcontract with someone else to do theirpayroll.
Some small schools may have less sophisticated financial operations. TheAmerican
Montessori Society (1994) reports that 88 percent of surveyed schools prepare abudget, 81 percent have the budget approved by a board, and 25 percent usepurchase orders. In some
schools, parents or other volunteers may help with financial operations. Non-studentvolunteers
were used for management support in 17 percentof private schools in 1985-86, and for clerical
25 support in 30 percent of private schools (Westat,1987). The smallest and largest schools were more likely to use volunteers in managementoperations than schools of intermediate sizes: management volunteers were used in 24 percentof schools with less than 50 students and 23 percent of schools with 600 or more students.Clerical volunteers were much more common in
Catholic schools (43 percent), than in other religious schools(26 percent) and non-sectarian schools (12 percent) (Westat, 1987).
Affiliations with Religious Institutions. A final dimensionof private school organization that bears heavily on financial operations and records isthe strong link between many private schools and their sponsoring religious institutions. In therelatively common situation where a school is strongly linked to a church or congregation, the budgetary statusof the school is complicated by the flow of money and goods between the churchand school. Smith (1991) notes that this relationship can complicate financial record-keepingof the school in two ways. First, the church may be unable or unwilling to report school financesseparately from church finances.
Second it is difficult to account for space, labor and other servicesdonated by the church to the school.
According to the Private School Universe -Survey for -1991-1992, 34 percentof private schools in the United States are Catholic, 45 percent are otherreligious schools, and 20 percent are non-sectarian (Broughman et al.,1994). The degree of affiliation between a religious school and a church or other institution can vary considerably: some religiousschools are directly sponsored by a local church or parish, some are indirectly linked throughthe support of the local community or congregation members, and others are quite independent of anyparticular local
congregation. There is also variation in the degree to whichdifferent denominational
organizations play an active role in religious schools (Vitullo-Martin,1991). Some
11-12 26 denominational organizations supply curriculum, handbooks ofaccounting principles and health benefit plans, while others consist of a network of schoolswithout any central office or staff.
Differences Across Types of Private Schools: Implicationsfor Data Collection
Different types of private schools tend to differ along severaldimensions that may play an important role in the any effort to collection data on revenuesand expenditures. One key dimension on which private schools vary is the degreeof organizational autonomy and affiliation.
Because the degree of autonomy and affiliation tends to vary acrossdifferent denominational groups, we consider each of the majordenominations in turn. We then describe the various types of non-sectarian schools, including both not-for-profitand proprietary.
Catholic Schools. Over one-third of the private schools in theUnited States, or 8,900 schools in 1991-92, are Catholic schools. (Broughman et al.,1994). This is 4,300 fewer schools than the peak of 13,200 Catholic schools in 1964-65(McLaughlin et al., 1995). The majority of
Catholic schools are sponsored by a local parish, or in some cases, two or morelocal parishes. In
1991-92, 62 percent of all Catholic schools were parochialschools, 28 percent were sponsored by one of the 171 dioceses in the UnitedStates, and the remaining 10 percent were run by private religious orders, such as the Christian Brothers. or the Jesuits(Broughman et -al., 1994; Vitullo-
Martin, 1991). Almost all of the parochial schools (94 percent), aswell as the majority of diocesan schools (76 percent), are elementary schools. In contrast,the majority of private order
schools are secondary schools (53 percent) or combined schools(20 percent) (Broughman et al.,
1994).
In some respects, Catholic schools, particularly parochialand diocesan schools, are linked
with the centralized administration of the Catholic church.The organizational structure of
Catholic schools and parishes is governed in part by canonicallaw. For example, Canon 537
requires financial committees of parishioners, and Canon1284 guides the management of parish
11-13 finances, requiring, among other things, properfinancial bookkeeping (Harris, 1995). Although the school may be owned by a local parish,it is more common for the buildings and groundsof the school, as well as the church, to be ownedby the bishop or archbishop.
Despite this appearance of Catholic schools being partof a church hierarchy, the degree of centralized administration and local autonomy may vary acrossdioceses.Vitu llo-Martin (1991) concludes that in many dioceses, the diocesanadministrative office plays a limited administrative function that is akin to the role played by nationalassociations: providing some general guidance on standards and curriculum,but no direct oversight. The study by Scott andMeyer (1988) supports this generalization byproviding empirical evidence of the limited size ofadministrative staff in two dioceses and one archdiocese in California.On the other hand, other dioceses may have more substantial central staffs concerned withschool administration and finance.
Catholic parochial elementary schools in many dioceses are more tightlylinked to the
local parish than to the centralized church hierarchy.Parish administrators, and, in many parishes,
a parish school board, areheavily involved in school policies, including budgetarypolicies
(Vitullo-Martin, 1991). The parish board, which is sometimes asubcommittee of the parish
council, usually consists of the priest (or otherparish-administrator); the principal; and selected
parents and members of the parish, and isresponsible for fund-raising, as well as setting overall
school policies (Vitullo-Martin, 1991).
In the past, many Catholic school budgets weremerged into the accounting system of the
entire parish.Over the past two decades, the budgets havetended to become more separate as
many school budgets have grown to surpassthe rest of the parish budget. As school costs have
increased, the parish subsidy has shrunk, and tuitionsand fund-raising have increased as a
percentage of the parish budget (Harris, 1995).Parish subsidies accounted for 63 percent of
Catholic elementary school operating costs in 1969-70;50 percent in 1978-79, and 35 percent in
11-14 1993-1994 (Cibulka et al., 1982; Harris, 1995; Kea ley, 1994). Although the amountof the subsidy has decreased, the vast majority (90 percent) of Catholicelementary schools still receive some fmancial subsidy from a parish(Kea ley, 1994).
Diocesan secondary schools, and to an even greater extent,private order schools, tend to resemble non-sectarian high schools in the sense that theirfinancial stability is less dependent on
church subsidies and more dependent on their ability to securepaying students. Tuition accounted
for three-fourths (75 percent) of the income in secondaryCatholic schools in 1994 (Guerra; 1995).
Diocesan schools are governed by the diocesan school board(generally lay people); private order
schools tend to have lay boards of trustees (Vitullo-Martin,1991).Still, the typical diocesan
school receives some subsidy from the diocese (Vitullo-Martin,1991). Some private order
schools also receive diocesan subsidies, sometimes in theform of subsidies per student from the
diocese. Other private order schools are so independent that theydo not even report to the diocese
in which they are located (Vitullo-Martin, 1991).
Lutheran Schools. There were 1,650 Lutheran schools in1991-1992, including over
1,086 in the Missouri Synod, 384 in the Wisconsin Synod, 121 in theEvangelical Lutheran
Church of America, and 59 other Lutheran schools-(Brou-ghmairet al:;1994). Most Lutheran
schools are small elementary schools (McLaughlin et al., 1995).According to statistics from the
Lutheran Church-Missouri Synod, the average Lutheran elementaryschool is a small school with
only 7 teachers, serving children in pre-kindergarten througheighth grade, and the average
Lutheran high school has 17 teachers (Lutheran Church - MissouriSynod, 1994).
Cooper (1988) reports that one-third of Lutheran churches 'havetheir own schools, which
are viewed as a church mission.Vitullo-Martin (1991) notes that a number of Lutheran schools
from the Wisconsin and Missouri Synods are heavily supported bylocal congregations, even to
the point of not charging tuition to students. Data from the 1990-91Schools and Staffing Survey
11-15 suggest, however, that tuition ischarged in all but 2 percent of Missouri Synodand 5 percent of
Wisconsin Synod schools (McLaughlin et al.,1995). In the Evangelical Church of America,the vast majority (92 percent) ofschools are sponsored by a congregation orinstitution, but in this case, congregational supportis in addition to regular tuition charges(Evangelical Church of
America, 1993). Conservative Christian Schools. Over 4,000schools, or 16.5 percent of all private schools surveyed in 1991-92, identifiedthemselves as Conservative Christian schools(Broughman et al, 1994). This sector of theprivate school universe experienced the mostrapid growth during the 1970's and 1980's (McLaughlin et al.,1995). Many are affiliated with the Associationof
Christian Schools International (ACSI), (1,941schools in 1990-91), or the American Association of Christian Schools (AACS). Many others areunaffiliated with any national organization.
Erikson (1986), Cooper (1988), and Vitullo-Martin(1991) note that is difficult to get an
accurate account of the unaffiliatedreligious schools, particularly Fundamentalist ones,because
some of them resist responding to surveys,or even letting their whereaboutsbe known to the
government. Cooper (1988) estimatesthat there were as many as 10,700 ConservativeChristian
schools in 1983-84, and nearly 12,000 in 1988.The speculation- of Erikson (1986) that there may
be over 6,000 private schools in 1983-84, ortriple the 2,148 reported by the Associationof
Christian Schools International, is closer to the4,000 reported by the 1991-92 PSS.
Conservative Christian schools are smaller than the averageschool (Broughman et al.,
1994). They tend to be individualistic and autonomous,in the sense of not being part of any
centralized structure (Cooper, 1988). There is someevidence, however, that at least some of them
are highly integrated with theirlocal church. An in-depth study of oneFundamentalist school
found that the church and school were intensivelylinked as a "total institution" that immersed students in a Christian environment throughoutthe day and week (Alan Peshkin, God's Choice:
The Total World of a Fundamentalist ChristianSchool, cited in Erikson, 1986).
Seventh-Day Adventist Schools. Another rapidly growing group arethe Seventh-Day
Adventist schools, which numbered over 1,000 in 1991-92.Over one third of these schools were established since 1980. Many Seventh-Day Adventistschools are small; 70 percent have fewer than 50 students and more than one third haveonly one teacher. Seventh-Day Adventists also operate a fair number of regional boardingschools. Seventh-Day Adventist schools operate world-wide, and local schools are supported by a strongcentralized system that provides a curriculum, a centralized payroll system with subsidizedbenefits for teachers, and a centralized auditing service (McLaughlin et al., 1995; GeneralConference of Seventh-Day Adventists, 1984,
1995).
Jewish Day Schools. Jewish day schools, which number over650, are characterized by considerable local autonomy (Vitullo-Martin, 1991).Himmelfarb (1993) and Vitullo-Martin
(1991) both note that while two-fifths of Jewish day schools aresponsored (one-fifth by synagogues and one-fifth bycongregations), three-fifths are independent schools, governed by a board of trustees.
Much of the communal funding for Jewish day schools comesthrough the community fundraising efforts of local Jewish federations (Vitullo-Martin,1991). As much as 15 percent of school expenses are estimated to be funded throughthese community fund-raising groups, which contribute to a variety of school costs, including facilities,personnel costs, and scholarships
(Himmelfarb, 1993; Jewish Education Service of NorthAmerica, 1984, 1994). The most common funding method is for a local federation to provide localday schools with a lump sum.
Alternative funding methods include providing a percentageof the budget, or funds toward any
budgetary deficit; allocating funds per pupil; subsidizing teachercompensation; providing
11-17 31 scholarships to individual students; or funding special programs(Jewish Education Service of
North America, 1994).
Other Religious Schools. Most of the remaining groupsof religious schools are also less directly connected to churches than are the Catholic orLutheran schools. Episcopal schools, while connected to the church through the localclergy and parents, do not have strong formalties to the church hierarchy (Cooper, 1988).There were close to 350 Episcopal schools in1991-92
( Broughman et al., 1994). Many of these grew outof cooperative church kindergartens or preschools (Cooper, 1988). The Calvinist schools,which form the majority of Christian Schools
International, are run by parent societies, rather thanthe formal church structure (Cooper, 1988).
Friends (Quaker) schools, which numbered 76 in1991-92, are known for being decentralized, and include some of the oldest operating schools in the country.
Cooper (1988) notes that all Greek Orthodox schools areattached to a church or a cathedral and supported by the local Greek-Americancommunity (Cooper, 1988). There were 28
Greek Orthodox schools in 1991-92, more than twicethe number in 1965 ( Broughman et al.,
1994; Cooper, 1988). Most of these schools are elementaryschools.
There is little literature on the remaining groups- of religiousschools. In addition to the
denominations discussed above, Broughman et al. (1994) listschools affiliated with the following
denominations (some of which are overlapping with theConservative Christian schools):
unspecified Christian (2,473), Baptist (2,108), Assemblyof God (421), Amish (401), Pentecostal
(382), Mennonite (326), Church of Christ (157),Presbyterian (140), Church of God (123),
Methodist (71), Islamic (44), and other religious(1,029). Although some of these religious
schools may be affiliated with a national association, as many as3,500 of them report that they
are religious schools that are notformally affiliated with a national religious denomination. NAIS Schools. There are 1,500 schools that reported beingmembers of the National
Association of Independent Schools (NAIS) whenresponding to the 1990-91 Schools and Staffing
Survey (McLaughlin et al., 1995). NAIS membershipstatistics report only 915 active members in the United States as of September 1992 (NAIS,1993). Part of this difference may reflect the fact that NAIS statistics regard schools servinggrades kindergarten through twelve as one unit,
whereas other surveys may view them as two separateschools. Three-fourths of NAIS schools
are non-sectarian, the remainder areEpiscopalian, Catholic, Friends, or one of 11 other
denominations (Vitullo-Martin, 1991). All schools characterized asindependent schools have a
self-regulating board of trustees (Barbieri, 1992). Inaddition to having an independent board,
schools seeking membership in NAIS must meet NAISstandards, place an emphasis on academic
excellence, and go through a five-year probationary period(Vitullo-Martin, 1991).
Most NAIS schools have selective admissions policies andhigher costs and tuition fees
than other private schools (McLaughlin et al., 1995).Although fewer than 5 percent of NAIS
schools are strictly boarding schools, over one-third have atleast some boarding students (NAIS,
1993).
Vitullo-Martin (1991) reports that the business offices. of NAISschools are more
formalized than in other private schools. NAIS publishesBusiness Management for Independent
Schools, a handbook that describes accounting practicesfor independent schools (NAIS, 1990).
The average NAIS school has more administrators thanthe average Catholic school: one school
administrator per 5.5 teachers and 53 students (Vitullo-Martin,1991).
Special Education Schools. Another significant sector in thenon-sectarian private school
universe are special education schools, which numbered1,163 in 1991-92 (Broughman et al,
1994). These schools serve children with special intellectual,physical, and emotional challenges.
Distinguishing organizational characteristics of schools in this sector arehigh costs, low student-
11-19 teacher ratios, and, in many schools, a combination of private control and publicfunding
(McLaughlin et al, 1995). State and local public education agencies providemuch of the funding the special education schools, and one-third of special educationschools did not charge tuition to parents in 1990-91 (McLaughlin et al., 1995). A high proportionof special education schools (44 percent) are boarding schools (McLaughlin et al., 1995).
Montessori Schools. Montessori schools form another significant sectorof the private school universe. According to the 1991-92 Private School UniverseSurvey, 680 schools fit the classification of non-sectarian Montessori schools, although a total of 829schools reported having a Montessori program emphasis. Data fromthe American Montessori Society suggest that about one-third of Montessori schools are proprietary, with the remaining two-thirdsnot-for-profit.
These data, however, cover preschool programs as well as elementaryand secondary schools
(American Montessori Society, 1992).
Most Montessori schools are small; about half the schools had fewer than50 students and the average enrollment was 60, according to the 1990-91 Schools and StaffingSurvey. These enrollment figures exclude the prekindergarten students. In fact, most Montessorischools began as preschool programs, and continue to maintainpreschool programs, as well -as elementary schools and some combined elementary/secondary schools.
Other Non-Sectarian Schools. In addition to NAIS schools, special education schools,
and Montessori schools, the non-sectarian sector including military schools, schoolswith a special
emphasis, and alternative schools.
There were 21 military schools in 1990-91, all of which were secondary-level boarding
schools (Broughman et al., 1994). Special emphasis schools include schools for theperforming
arts, languages, math/science, or vocational/technical.Despite their significant numbers (there were 1,810 special emphasisschools in 1990-91), there does not appear to bemuch literature describing these schools.
A number of the remaining non-sectarianschools, as well as some religious schools, consider themselves alternative schools.Close to 1,500 schools reported having analternative program emphasis (Broughmanet al., 1994). Some of the alternativeschools are quite new and
small. Average enrollment of schoolswith an alternative program emphasis was69 in 1990-91
(Broughman et al., 1994). In some cases, a groupof dedicated parents and teachers may start a
school on a shoe-string budget (Barbieri,1992). Some small schools may not have anycentral
administrators, but rely upon teachers or parentvolunteers to provide bookkeeping services
(Barbieri, 1992).
Proprietary Schools.Hirschoff (1986) estimated that about one-tenthof private schools
in 1977 were operating as for-profit institutions.These schools enrolled less than 10 percentof
private school students because of their smallerthan average size (Hirschoff, 1986). Most ofthe
literature on private schools is limited to adiscussion of not-for-profit private schools.National
reports on the data collected throughthe Private School Survey and the Schoolsand Staffing
Survey do not report statistics on proprietary schoolsseparately from other unaffiliated schools,
leaving little information on this sector. Broughman etal. (1994) do report that there were 372
schools affiliated with the National IndependentPrivate School Association, an association of
proprietary schools.
Major Components of Expenditures
The final section of this literature reviewconsiders different components of expenditures
of private schools and some cross-cutting issuesthat are likely to affect the design of a finance
survey. In this chapter, expenditures arediscussed in the object categories used in many private
11-21 35 school association surveys: (1) salaries and benefits, (2) other currentoperating expenditures, and
(3) capital expenditures. An alternative approach to expenditureclassification, focusing on functional categories, (i.e., instruction, administration, plant, etc.)will be followed in Chapter M.
In this chapter, several issues that affect survey design arediscussed, including the treatment of donated labor, after-school programs, in-kind contributions, theparticipation of schools in public programs, and boarding schools. Mostof this section is based on a review of different questionnaires used to collect data from public and private schools.In addition to the NPEFS, the
F33, and the IPEDS discussed above, these questionnaires include surveysprepared by several different private school associations.
The National Catholic Educational Association (NCEA) conducts twobiennial surveys of school finances, one for elementary schools, and one for secondaryschools. In 1993, they sent a
5-page, 89-item "Survey of Catholic Elementary School Finances" to asample of 1,021 elementary schools, and received responses from 628 schools, or 61 percent(NCEA, 1994). In
1994, they sent a more detailed, 8-page "Survey of CatholicSecondary School Finances" to a sample of 500 secondary schools, and received responses from 293schools, or 59 percent (NCEA,
1995).
Response rates were higher for surveys sent by two different Lutheranschool associations.
The 1993-94 Statistical Report Summary of Schools of the LutheranChurch-Missouri Synod was based on responses from 1,717 out of 2,136 schools, an 81 percent responserate, and the 1992
Annual Statistical Report of the Evangelical Lutheran Churchin America was based on responses from 112 out of 150 schools, a 75 percent response rate(Lutheran Church-Missouri Synod, 1994;
Evangelical Lutheran Church of America, 1993). One interestingfeature of the Lutheran Church-
Missouri Synod school report form is that the 5-page form isaccompanied by a detailed two-page
work sheet for calculating annual operating costs.
11-22 Completing annual survey forms is one of therequirements for membership in the
National Association of Independent Schools.The 1993 NAIS statistics are based on responses from 915 member schools (NAIS, 1993).
The American Montessori Society (AMS) distributed acash flow survey to 659 AMS affiliated schools in 1994, following upon atuition survey in 1992 and a salary survey in1993
(American Montessori Society 1992, 1993,1994). Only 138 surveys were returned in1994, representing a 21 response rate. The chairmanof the Association of Waldorf Schools ofNorth
America reports that only about half of the95 member schools complete their annualAWSNA financial survey (D. Alsop, personal communication,March 14, 1994).
Some of the private school association surveysask one or two questions about current operating expenditures, while others ask a seriesof detailed questions about different components of expenditures.
Salaries and Benefits
Salaries and benefits are the largest expenditure categoryin private schools. Spending on salaries, benefits and payroll taxes accountsfor 50-70 percent of expenditures in NAIS schools, about two-thirds of expenditures in Montessorischools; and almost three-fourths of expenditures in Catholic secondary schools (Aitken, 1994;American Montessori Society, 1994; Guerra,1995).
Salaries. There is a fair amount of literature on thesalaries of private school teachers,
and a lesser amount on benefits. Chambers(1995), Ballou and Podurgsky (1995a, 1995b) and a
number of other researchers have used salarydata reported in the 1990-91 Schools andStaffing
Survey to examine the differential betweensalaries of public and private school teachers.
Chambers (1995) reports that private schoolteachers earn about 50-80 percent of whatpublic
school teachers earn. Some, but not all,of this differential can be explained by differencesin
teacher characteristics (such as lower degreesand less experience in the private school sector)and
11-23 differences in working environment (such assmaller class size). Private school teachers arealso less likely than public school teachers tobe unionized: ten percent of Catholic schools are unionized (Chubb & Moe, 1990).
Many analysts note that salary costs in privateschools have increased in recent years.
Harris (1995) and Erikson (1986) reportincreases in salaries in Catholic schools,and Aitken
(1994) notes that there was a dramatic 25 percentin salaries for teachers at NAIS schoolsbetween
1980 and 1990, after adjusting for inflation.Expenditures for salaries in Catholic schoolshave been increasing over the past couple ofdecades as lay teachers have been hired toreplace the diminishing number of priests, sisters, andbrothers, and as the stipends paid to the remaining teachers from religious orders have risen toapproach the levels of lay salaries (Harris,1995;
Erikson, 1986). The increase in costs for thereligious teachers is attributable in part to the costs of supporting the increasing proportion ofelderly religious (Erikson, 1986). Furthermore,
Catholic schools have been hiring more teachers perpupil, adding teaching staff such as
librarians, art teachers, and music teachers (Harris,1995).
Salary costs are likely to vary considerably acrossdifferent types of private schools,
because of differences in student-teacher ratiosand in salary levels.- Student-teacher ratios range
from an average of 10:1 or lower for certainJewish day schools, non-sectarian NAIS schools,and
schools for exceptional children, to an averageof 20:1 or higher for Catholic schools and
Lutheran schools from the Missouri-Synod(McLaughlin et al., 1995). The overall student-teacher
ratio in private schools is 16.1:1, compared to16.7:1 in public schools.
McLaughlin et al. (1995) report that salary levelsin conservative Christian schools are
lower than average, and that, when comparedwith other private school teachers, teachers at
conservative Christian schools tend to be younger,somewhat less likely to have advanced degrees,
and have fewer years of teaching experience.According to the 1990-91 Salaries and Staffing
II-24 38 Survey, 13 percent of principals at conservative Christian schools, and 34 percentof principals at unaffiliated, religiously oriented schools, do not have bachelor's degrees(McLaughlin et al.,
1995).
Salary expenditures are higher in NAIS schools than in other privateschools because they have lower student-teacher ratios (8:1 in NAIS secondary schools), moreexperienced teachers, and higher salary scales, particularly for administrators (Vitullo-Martin,1991).
Vitullo-Martin (1991) reports that average teacher salaries in Jewishschools are higher than in Catholic schools but lower than in NAIS schools. Furthermore,Jewish schools employ
more teachers than most other types of privateschools because of the dual curriculum of Jewish
studies and general studies (Himmelfarb, 1993).
The number of staff in instructional support and student support services canalso affect
salary costs. Benson and McMillen (1991) report that 59 percent ofCatholic schools, 30 percent
of other religious schools and 42 percent of nonsectarian schools hadlibrarians in 1985-1986.
Furthermore, only 30 percent had guidance counselors, ranging from 32 percentin Catholic and
non-sectarian schools to 26 percent in other religious schools. Both librariansand guidance
counsellors were much more common in high schools than in' elementarrschools.
Respondents to an American Montessori Society survey report that budgetaryconstraints
are the most important factor affecting teachingsalary levels, higher in influence than experience
and qualifications, salaries at other area schools, and changes in cost ofliving (American
Montessori Society, 1993).
Benefits and Payroll Taxes. Fringe benefits and payroll taxes are an important partof
the overall costs for teachers and other staff.Benefits and payroll taxes accounted for about 11
percent of total expenditures by NAIS schools (NAIS,1993). Harris (1995) notes that pension
expenses in Catholic schools grew significantlyhigher than inflation over the 1980's.
11-25 Not all private schools offer health andretirement benefits. According to reports from private school associations, the percentageof private schools providing health benefits ranges from an average of 91 percent of Catholic elementaryschools, to 77 percent of Evangelical
Lutheran schools, and only 50 percent ofMontessori schools (Kea ley, 1994; EvangelicalChurch of America, 1992; American Montessori Society,1993). Data from the 1990-91 Schools and
Staffing Survey indicate that two-thirds of privatehigh schools provide medical insurance to teachers, ranging from more than 95 percent ofCatholic schools to less than half of other religious schools that are not affiliated with anational or regional association (Baker et al.,1995).
Coverage by retirement plans is even lower.Baker et al. (1995) report that less than half of private secondary schools contribute toemployee pension plans. Van Geel and Crampton
(1991) found that 83 percent of the 30 New Yorkprivate schools they surveyed offered employees a pension plan. The NCEA alsoreported that 84 percent of Catholic elementary
schools nationwide contribute to such plans(Kea ley, 1994). The proportion of schools
contributing to pension or tax-deferred savings plansdrops to 67 percent for Evangelical Lutheran
schools, and only 29 percent for Montessorischools (Evangelical Lutheran Church of America,
1993; American Montessori Society, 1993).
Additionally, the NCEA reported that 58 percent ofCatholic elementary schools
contributed to life insurance plans and 57 percent tounemployment (Kea ley, 1994). The
American Montessori Society reported that 27 percentof Montessori schools had life insurance
plans and 22 percent had disability plans(American Montessori Society, 1993).
Part-time teachers are probably less likely to receivefringe benefits than full-time teachers.
According to the 1990-91 SASS, 18 percentof private school teachers teach part-time, including
almost half of the teachers at Jewish dayschools (McLaughlin et al., 1995).
11-26 40 Furthermore, not all fringe benefits are paid for directly by the school. Some of the fringe benefits such as pensions or health insurance may be offered through the nationalassociation
(Aitken, 1994). Vitullo-Martin (1991) reports that the health insurance, life insuranceand pensions benefits for 181 different Jewish day schools in the New York area arepaid for out of an philanthropic endowed fund called theFund for Jewish Education.
Donated Labor. One issue to consider in collecting data on salaries is how to treatthe free and reduced-price labor of religious personnel and others. Although anincreasing number of
Catholic schools are paying religious personnel on the same salary scales aslay personnel, it is still true that religious personnel in the majority of Catholic schools receivestipends that are lower than lay salaries. In Catholic elementary schools, sisters and male religiousmake up 11 percent of current school teachers and 50 percent of principals.These percentages will decline in
the future, given the high median age (55) of religious teachers and administratorsin schools
(Kea ley, 1994; Vitullo-Martin, 1991). Although its importance is declining in theAmerican
Catholic school sector, volunteer labor donated by religious personnel remains animportant
component in private schools throughout the world (James, 1991).Vitullo-Martin (1991) notes
that it is not unusual for the principal of a religious school to be the pastor of thesponsoring
church, in which case his salary is often considered part of the church's budgetrather than the
school's budget. Guerra (1995) estimates that contributed services of religious personnelin
Catholic secondary schools, defined as the difference between lay salaries andreligious order
stipends, had a value of over $80 million in 1994, or 3 percent of total operating expenses.
Religious personnel are not the only ones to provide volunteer labor to privateschools.
According to the final report of the 1985-86 private school study conductedby Westat for the
NCES, 72 percent of private schools used student or non-student volunteers, including84 percent
of Catholic schools, 72 percent of other religious schools, and 45 percentof non-sectarian schools.
11-27 41 Close to half (47 percent) of all schools used non-studentvolunteers for instructional support, and a similar percentage (46 percent) ofschools used non-student volunteers for extracurricular support. Additionally, 16 percent of schools usednon-student volunteers for guidance support, 17 percent for management support, 30 percent forclerical support, and 34 percent for other kinds of support. Volunteers were used in schools of allsizes, although elementary schools were more likely to use them than secondary schools (Westat,1987).
Salary Data by Categories of Personnel. Another issue tobe considered is the appropriate breakdown of salary information into such categories asteaching, administration, maintenance, etc. The minimum breakdown is probably betweenteaching and non-teaching
compensation, as is requested by the Organization for EconomicDevelopment and Cooperation
(OECD). The largest number of categories for salary and benefitinformation is probably the
many functions and sub-functions inthe National Public Education Financial Survey, (i.e.,
instructional services, student support services, instructional staff supportservices, general
administration support services, school administration supportservices, business support services,
operation and maintenance services, student transportation supportservices, central support
services, other support services, food services and- enterprise operations).
Some surveys of private school associations simply ask for totalsalaries and benefits (e.g.
the American Montessori Society 1994 Cash Flow Survey andthe Association of Waldorf Schools
of North America, 1994). Other associations ask for more detail:the Catholic high school finance
survey distinguishes between teachersand administrators, as well as between lay personnel and
religious; the Lutheran Church-Missouri Synod worksheetdistinguishes between professional staff
and non-professional staff; and the NAIS surveydistinguishes between Teaching, Instructional,
Administrative, and Other (including Auxiliary, Plant/Maintenance,and Secretarial and Clerical).
11-28 42 Even breaking salary and benefit data into the two simple categories of teaching and non- teaching staff may be hard in some private schools. Kane (1992) notes that in independent schools, many administrators carry teaching duties and many teachers have administrative responsibilities. The NCES accounting handbook, Financial Accounting for Localand State
School System, 1990, directs public schools to allocate a person's salary andbenefits across teaching and administrative functions in the case of dual responsibilities (Fowler,1990).
After-School Programs and Pre-Kindergarten Programs. A final concernrelated to collecting salary and benefit compensation is how to ensure that salariesand benefits associated with after-school day care programs are not included in the data on elementaryand secondary schools. Some analyses may also require separation of pre-kindergarten datafrom K-12 data.
The NPEFS does not make such a distinction in public school finance data,however.
Many private schools have prekindergarten programs and after-school programs.In 1993,
43 percent of Catholic elementary schools had prekindergarten programs, and 42 percenthad extended-day programs, significantly more than in earlier years (Kea ley, 1994). Aggregate statistics collected across all Lutheran church bodies by the Lutheran Church-MissouriSynod
(1994) indicate that there were more Lutheran early-childhood-education-programs in1993-94
than Lutheran elementary schools, particularly in the Evangelical Lutheran Churchof America,
which operates 1,200 preschool programs and 110 elementary schools. Aboutthree-fifths of
Montessori programs offer preschool programs only; two -fifths offer a combination ofelementary
and preschool programs (American Montessori Society, 1994). The same typesof schools that
offer pre-kindergarten programs also are likely to offer after-school programs: morethan half of
the Montessori elementary schools and 43 percent of Evangelical Lutheranelementary schools
offered after-school programs in 1990-91, compared with 19 percent of all privateschools
(McLaughlin et al, 1995).
11-29 43 There is little information on the relationship between private elementary schools andtheir associated preschool programs and after-school programs.It is likely that various programs fall along a spectrum from complete independence of operations, to sharing of facilities,utilities, supplies, administrative staff, and even, in some cases, teaching staff.It is not clear how easy or difficult it is for private schools to allocate the appropriate percentage of totalsalaries and benefits to the elementary and secondary portions of their totalschool budget. Similar allocations may also be needed for supplies, utilities, and other operating expenditures that maybe shared across programs.
Other Current Operating Expenditures
Schools have expenditures over a broad range of categories other than salaries and benefits. Schools typically incur costs for textbooks and other instructional supplies, administrative supplies, and maintenance of school facilities. Schools may also haveexpenditures for transportation, meal service, or boarding services. Many schools have financialaid programs.
Finally, schools often incur costs associated with purchasing, renting, or improving facilitiesand equipment, and these latter costs may be classified as capital expenditures or current operating expenditures, depending on the school's accounting system:
Current operating expenditures other than salaries and benefits can be categorized a
number of different ways. The National Public Education Financial Survey has a 30-cell matrix,
consisting of three different types of expenditures (i.e., purchased services, supplies, and other),
spread across different functional activities (i.e., instructional services, support services, non-
instructional support services, and their related subfunctions) (NCES, 1992). The NPEFS also
includes an additional item on Tuition (paid by the school district to other schools). Thework
sheet on operating costs that accompanies the Lutheran Church-Missouri Synod (1994) survey
breaks down costs in more detail although not in a matrix; 40 items are grouped under the general
11-30 44 categories of Curriculum, Co-Curricular Activities, Student Services, Office, and Contracted
Services. The NAIS (1993) requests expenditures for three categories and eightsub-categories:
Student Activities, Financial Aid/Tuition Remission, and Other (a category consistingof
Instructional, Athletic, Plant, Administrative, etc.) The American Montessori Society(1994) includes 14 categories of expenditures; the Association of Waldorf Schools ofNorth America
(1994), six categories.
Although the private school surveys differ greatly, there are some common elements.The following expenditure categories are found across the majority of the surveys:building maintenance and utility costs; educational supplies; and financial aid. These are discussedbelow, followed by a discussion of additional categories of current operating expenditures found on two or more of the surveys.
Building Maintenance and Utility Costs. All the surveys that request detailed data on expenditures include a question on maintenance costs. Many surveys have one category for combined maintenance and utility costs, or general plant operating expenses. Other surveys request school administrators to report expenditures for maintenance and utilities as two separate items. At the other extreme, the Lutheran Church-Missouri-Synod (1994) work sheet breaks
Maintenance into four subcategories (paper supplies, cleaning supplies, light fixtures, and other),
and requests separate information about Utilities (by type of utility) and different types ofRepairs.
In the NPEFS (1992) survey, expenditures for the activity subfunction "operation andmaintenance
services," are reported by type of expenditure (e.g., salaries and benefits, supplies, purchased
services, and other).
Schools affiliated with churches may receive utilities and maintenance services at no
charge, or at a reduced cost, from their sponsoring institution. For example, close to half the
11-31 45 schools sponsored by Evangelical Lutheran churches receivefree or reduced-rate utilities
(Evangelical Lutheran Church of America, 1993).
Educational Supplies. Another category common to most surveysis educational supplies, classroom supplies, or instructional materials. Somedistinguish between classroom materials and materials for the library or media center.
Catholic elementary schools report varying levels of spending oninstructional materials, from a national average of $98 per student in 1991 to anational average of $553 per student in
1993 (Kea ley 1990; 1992; 1994). Additionally, theschools receive some educational materials from the public schools, through the Federal Chapter 2 programs.Private school participation in publicly funded programs is discussed further below. Vitullo-Martin(1991) reports that Jewish schools spend more on instructional materials and equipmentthan other private schools.
McLaughlin et al. (1995) report that Jewish schools are more likely tohave libraries than most other private schools.
Supplies are defined as items that are consumed, worn out, ordeteriorated in the, instructions for the National Public Education Financial Survey (NCES,1992). Under this definition, supplies can range from classroom supplies,..to attendance-and paper supplies, energy expenditures, food expenditures and routine bus maintenance. Theprivate school association surveys do not tend to view these latteritems as "supplies."
Financial Aid. Financial aid, scholarships or tuition remission is anitem common to
several of the surveys cited above, although it is absentfrom the Lutheran work sheet and the
American Montessori Society survey. McLaughlin et al.(1995) report that 86 percent of private
schools provide financial assistance in the form of scholarships orreduced tuition payments,
including 94 percent of Catholic schools, 84 to 94 percent ofdifferent types of Lutheran schools,
99 percent of schools belonging to Christian Schools International(Calvinist schools), 83 percent
11-32 46 of NAIS schools, and 70 percent of regular non-sectarian schools.Aitken (1994) provides more detail on financial aid at NAIS schools:it is available for 16 percent of the students, accounts for from between 6 to 10 percent of expenditures of NAISschools, and is mostly funded through tuition.In its handbook for business managers, NAIS (1990) recommendsconsidering financial aid as an expense, with a separate line-item for tuitionremission to faculty. Another possible way to treat financial aid is as a tuition discount, or areduction in revenue rather than an expense.
Other Categories of Current Expenditures.It is difficult to generalize about the remaining categories of expenditures, because each private schoolassociation survey breaks the remaining operating expenditures into different categories.Similarly, the literature on private schools includes a few comments regarding various componentsof "other operating expenditures," but does not provide a comprehensive picture.
The two remaining major categories of current operating expenses onthe NPEFS, (other than Salaries, Benefits, Tuition, and Supplies), are PurchasedServices and Other. Purchased services include any services that are contracted out, ranging fromlegal services, to business services, to custodial services, etc. (NCES, 1992). The LutheranChurch-Missouri Synod work sheet also has a separate category for contracted services;-withthree subcategories: data processing, payroll or accounting, and other.
The "Other" category on the NPEFS primarily includes dues andfees in professional
organizations. The American Montessori Society 1994 cash flow surveyhas a separate item for
professional fees. The Association of Waldorf Schools of NorthAmerica (1994) survey has a
category called "professional development." In theLutheran Church-Missouri Synod (1994)
survey, costs for professional growth areincluded under the "other personnel costs" for
professional staff.
11-33 Two of the surveys NAIS (1993) and Lutheran Church-Missouri Synod (1994) have categories for Student Activities, or Co-Curricular Activities.The NAIS survey also has a separate category for athletic expenses. Student bodyactivities are not reported separately on the
NPEFS, but are included as instructional activities. For example, on theNPEFS, the athletic coach's salary is an instructional salary. Sports activities that operatelike a small business, where receipts provide funding for the activity, are reported as enterpriseactivities (NCES, 1992;
Fowlwer, 1990).
Enterprise operations are defined as activities that are run likeprivate businesses, that is, their activities or services are funded through receipts, such a book store,sports activities and food service operation. Such operations are generally notconsidered separately from other operations in private schools, because the entire school is a private business.
The Lutheran Church-Missouri Synod work sheet requests informationabout student services, including transportation, food, and other (such as bookstores). Food costs are also a separate item on the American Montessori Society 1994 cashflow survey. On the NPEFS, food services are considered either a separate 'subfunction under Non-InstructionalServices, or, if the
food service is run like a private business, as an enterprise .operation.
Vitullo-Martin (1991) notes that Jewish day schools have higher than average
transportation costs, because many of them have their own busses, as well ashigher than average
food costs, because they are open longer operating hours.
Insurance premiums are a separate category on the AmericanMontessori Society cash flow
survey and Lutheran Church-MissouriSynod work sheet. Harris (1995) and Cibulka et al. (1982)
note that energy costs, as well as insurance premiumsand maintenance costs and insurance
premiums can be quite high in private schools with agingbuildings, including many Catholic
schools.
11-34 A few private school association surveys request information on office expenses,such as printing and postage. The Lutheran worksheet includes development and publicrelations as an additional office expense. Much of this type of administrative expense is likely tobe greater in private schools than public schools, because of expenses for development orfund-raising, the office of alumni affairs, and admissions and recruitment. Kane (1992) reportsthat independent day schools estimate spending $400 per student on recruitment and thatboarding schools estimate spending over $500 per student, in addition to the salaries of the admissionsstaff. The American
Montessori Society (1994) reports that Montessori schools spend about 1 percentof their total expenditures on advertising. The Association of Waldorf Schools of North America(1994) lists
PR/Advertising as one of eight categories of expenditures.
Finally, a few private school associations ask questions about classroom andother equipment. Other surveys ask about rental payments and mortgage payments.These types of categories raise the issue of distinguishing current operating expenses from capital expenses.
Current expenditures in the NPEFS are defined as including all current outlays otherthan expenditures on enterprise operations, property acquisition, and debt retirement(Fowler, 1990)
Furthermore, the instructions in the NPEFS handbook-indicate-that-although statesdiffer in whether they treat equipment as a current operating expense or a capital expenditure,for the purposes of data collection through the NPEFS,all equipment should be classified as a property expenditure that is excluded from current expenditures.
Rental payments are thus current operating expenses, but mortgage payments arecapital expenditures. Supplies that are used up are current operating expenses; equipmentthat is durable are not. The treatment of capital expenses isdiscussed further below, after a review of three issues related to current operating expenses: in-kind contributions, private schoolparticipation in public programs, and boarding schools.
11-35 In-Kind Contributions. Just as the accounting of salaries and benefits is complicatedby the treatment of donated labor, the accounting for other operating costsis complicated by the issue of donated goods or in-kind contributions. There are two typesof in-kind contributions: in- kind benefits paid to teachers in addition to their salaries, and in-kinddonations received by the school, in addition to their regular income.
According to the 1990-91 Schools and Staffing Survey, a number of teachersreceive in- kind benefits in addition to their salaries: 7 percent receive free orreduced-cost housing; 11 percent meals; 14 percent tuition waivers for their ownchildren; 2 percent child care; 8 percent college tuition and 9 percent transportation (McLaughlin et al, 1995). Ballou andPodgursky
(1995b) note that such in-kind benefits can help compensate private school teachersfor their salaries, which are low relative to public teacher salaries. Kea ley (1992) notesthat low stipends for Catholic school teachers are sometimes supplemented by parish provisionof residence, automobile, cook, and housekeeper. Not all of these in-kind benefits may be paid outof the school operating budget (Kea ley, 1992). Should these costs be included as schooloperating expenses? Can they be accounted for? Harris (1995) notes that the provision of somein-kind benefits, for example, the convent grocery bill, is less of an- issue- now .than inthe past because of the dramatic fall in the number of teachers who are members of the religiouscommunity.
The extent to which some schools receive support from their sponsoring churchthrough the donation of in-kind benefits is suggested by the results of the 1992 surveyof the Evangelical
Lutheran Church of America. The vast majority (92 percent) of these Lutheran schools are
sponsored by a Lutheran congregation, synod or institution of higher education.The majority of
sponsored schools (69 percent) benefit from free or below market rental rates,and 46 percent
benefit from free or reduced rate utilities. Furthermore, 32 percent receivefinancial subsidies other than rent or utilities; 49 percent receive volunteer servicesfrom the sponsor, and 33 percent receive donated goods from the sponsor.
Participation in Public Programs
Another issue that affects current operating expenses is the extentto which private school activities are subsidized by publicly funded programs.
There is significant variation in the degree of public financial supportfor private schools.
Private schools in some states are eligible for transportation,textbooks, and in some states, health
and welfare services such as psychologists, speech teachers,and guidance counselling
(Encarnation, 1983; Van Geel and Crampton, 1991). Private schools arealso eligible to
participate in a number of federal programs, including Title ICompensatory Education, federal
programs for textbooks and library materials,vocational education programs, bilingual education
programs, and child nutrition programs.
According to the 1985-86 survey of private schools, 61 percentof all private schools
received publicly funded student services, including 90 percentof Catholic schools, 41 percent of
other religious schools, and 49 percent of nonsectarian schools.Large schools were more likely
to participate than small schools: 40 percent ofschools with fewer. than 50 students participated,
compared with about three-fourths of schools with 150 or morestudents (Westat, 1987). The
most common federal programs or services for whichschools received funds were
instruction/library materials (45 percent), child nutrition (34 percentof schools), and
remedial/compensatory education (22 percent). The most commonnon-federal programs or
services were transportation (46 percent of schools), speechtherapy (39 percent), health services
(38 percent), speech therapy (39 percent), guidance,social work, and psychological services (36
percent), and remedial/compensatory education (25 percent)(Westat, 1987). Transportation aid
was viewed as the most importantpublicly funded service by school administrators responding to
11-37 51 a survey in Minnesota, a statewhere a variety of publicly funded services were available(Darling-
Hammond, 1985).
When the NCEA reports spending on instructionalmaterials, it reports spending on books purchased by the school, exclusive of the textbooks on loan fromthe federal or state governments.
While this practice represents an accurate picture of expendituresfrom the school budget, it understates the total cost of educating a student in a privateschool.
Boarding Schools. A final consideration in collecting data on currentoperating expenses is whether the data collection effort will capture the costsexperienced in the one out of 15 schools (6.6 percent of the universe) that are boardingschools (McLaughlin et al., 1995).
The private school surveys of the late 1970's report that costs atboarding schools were two to three times higher than costs at dayschools (McLaughlin & Wise, 1980). Similar ratios are reported among NAIS day andboarding schools in 1991-1992 (NAIS, 1993). Vitullo-Martin
(1991) reports that administrative costs, as well as physical plantmaintenance costs, are higher in boarding schools than in day schools.
In general, the costs for boarding schools can probablybe captured by the same categories
as the costs for other schools. According tostatistics from NAIS (1993), costs in boarding
schools are higher than costs in day schools across every category:teaching and instructional
support salaries, administrator and othersalaries, student activities, financial aid, and other
expenses. This last category, whichincludes plant maintenance, food, energy, non-salary
administrative expenses, and other expenses, is particularlyhigh in boarding schools about 40
percent of total operating expenses in boardingschools, compared to 25 percent of total operating
expenses in day schools.
11-38 52 Capital Expenditures
The treatment of capital expenditures is a matterof some controversy among groups interested in accounting for public and privateschools, as well as other governmental andnot-for-
profit organizations. (See, for example, Gross etal., 1995.) Capital expenditures are defined as
spending on long-lived assets (for example, land,buildings, and equipment). In the for-profit
sector, the treatment of capital spendinghas a long and well-defined tradition. For-profit
organizations view capital assets as contributing toorganizational productivity over the lifetime of
the assets. Thus, in the for-profit sector, capitalexpenditures are not recorded as expenses in the
year in which the assets arepurchased. Instead, such organizations depreciate thevalue of their
assets each year (to reflect their anticipatedfinite lifetime), and they record as an expenseonly the
amount depreciated each year. Anyinterest on loans secured to finance capital spendingis treated
as a typical operating expense.
Until recently, most governmental and not-for-profitorganizations have not formally
depreciated capital assets; and different types ofnot-for-profit organizations have tended to take
different approaches to recording capital expenditures(and related interest expenditures) in their
formal accounts.2 For schools, capital spendingincludes expenditures- on buildings and land, as
well as the equipment needed to support thephysical plant (boilers and air conditioners). In
addition, capital spending ordinarily includes suchitems as furniture (desks and chairs), computers
and lab equipment, and school busses andother vehicles.
'The Financial Accounting Standards Board (FASB) hasrecently adopted a new standard requiring not- for-profit organizations to treat capital assets in a mannersimilar to for-profit organizations. In particular, not-for profits, according to the new standards,should record depreciation. The new standards do not apply to governmental organizations, which areunder the jurisdiction of the Governmental Accounting Standards Board (GASB). GASB is currentlyreviewing the framework for governmental accountingand may issue new standards shortly.
11-39 53 Often (but not always), public school districts maintain separatecapital project funds for resources to be spent on theacquisition of land, buildings, plant and equipment, and, at leastfor major capital projects, districts issue debt (in the form ofbonds) to provide the necessary support.
Private schools often tend to fund major projectsthrough resources obtained through gifts and donations. Thus, for both public and private schools,capital spending is often viewed as separate and distinct from the regular "operating budget."
The NPEFS and F33 data collections for public schoolseach ask respondents to distinguish capital from other forms of spending reported onthe surveys. The NPEFS requests information on expenditures for property and equipmentwithin the functional categories defined in the Accounting Manual (e.g., instruction services, studentsupport services, general administration, etc.). In addition, it requests information onexpenditures for facilities acquisition and construction services. Respondents are asked to sumthese items to produce a reported total capital expenditures.3 The F33 does not ask for expenditures on capital andequipment within functions; instead, it asks districts to report the total capitalexpenditures, broken into four categories: construction, land, equipment, and other.
The national data collection for postsecondary school'finance (the IPEDS) has taken a
somewhat different approach. The IPEDS asks eachpostsecondary institution to report the total
value of land, buildings, and equipment held by theinstitution at the start of the fiscal year, as
well as the additions and deductions made during the year.(Deductions are used to record
equipment that have been retired from service, lost due tohazard, or sold.)'
3The NPEFS also asks for information on interest and principal payments made toretire debt related to capital expenditures. Debt retirement is not ordinarilyincluded in either current or capital spending for public schools.
4As discussed above, the IPEDS forms are currently under revision, andthe new forms may include provisions for depreciation.
11-40 Although there is little literature on the subject, it appears thatthere are significant differences in the capital expenditures faced by different sectorsof private schools, as well as in the practices used to account for capital spending andcapital assets.
Many Catholic and other religious schools are housed inbuildings owned by the church,
and so never face the cost of purchasing buildings orpaying off mortgages directly. The current
market value of the buildings and grounds of Catholichigh schools is reported to vary from less
than $500,000 to $50 million, with a mean of $6.2 millionin 1992 and $8.1 million in 1994 and a
median of $4.4 million in 1992 and $6 million in 1994,according to estimates by school
administrators (Guerra, 1993, 1995). Garet et al. (1995) usedthese estimates of market value to
estimate that capital expenditures for Catholic high schoolsshould equal roughly 10 percent of
operating costs, under the rough assumption buildings and groundshave an average functional
lifetime of 30 years, and so schools "spend" 1/30 of the cost of thebuildings and grounds each
year. In fact, Vitullo-Martin(1991) reports that few Catholic schools have reserve or sinking
funds to replace capital facilities, despite the age of many ofthe buildings. Half the Catholic
schools in operation today were established before 1940(McLaughlin et al, 1995).
There is limited information about the physical plant'or capitalexpenditures of other
sectors. Vitullo-Martin (1991) reports that Jewishschools generally pay for their school building.
Jewish schools also tend to be located in high cost urban areas,including New York city. The
vast majority of Jewish schools have beenoperating less than 50 years, and half have been
established since 1960 (Vitullo-Martin, 1991; McLaughlin etal, 1995).
Administrators completing the Lutheran Church-Missouri Synod worksheet were asked to
estimate the current market value of the schools' physicalbuildings, grounds and equipment using
one of three methods: 1) a recentprofessional appraisal, 2) the audited value, or 3) an estimated
value, based on insurance company estimates, or the sumof the original cost, improvements or
11-41 55 additions, and appreciation or depreciation. Garet etal. (1995) report that the resulting estimates were quite variable, and suggesthigher market value of buildings and grounds thansuggested by the survey of Catholic high schools. They estimatethat reinvesting in the Lutheran buildings and grounds on a thirty-year basis would require anestimated 16 percent of the operating costs of
Lutheran schools, considerably higher than the10 percent ratio suggested by the data from the
Catholic high schools.It is not clear whether the difference reflectsvariability in estimating methods, or variability in the value of the buildings.Many Lutheran schools from the Missouri
and Wisconsin Synods were established many years ago;thirty percent of current schools were
operating in 1900. Evangelical Lutheran schools aremuch younger; most started operations
within the past 30 years (McLaughlin et al., 1995).
Some private school association surveys, includingthose prepared by the Association of
Waldorf Schools of North America (1994) and the AmericanMontessori Society (1994), do not
distinguish between rental payments and mortgage payments.Those responding to the survey of
the American Montessori Society (1994) reported spending amedian of 11 percent of their
income on rent or mortgage, although the responses rangedfrom less than 1 percent to over 40
percent.
Some schools do not report capital spending forbuilding maintenance and renewal
directly.Instead, such schools regularly transfer a budgeted amounteach year from regular the
regular operating fund to a capital or "sinking" fund.This fund is then used to fund capital
spending on maintenance and renewal as the need arises.The NAIS 1993 survey includes a
category called "provision for plantreplacement, renewal, and special maintenance (PPRRSM)."
This category funds set aside to cover potentialspending on assets such as automobiles, busses,
computers, office equipment, heating orplumbing systems, and roofs. The NAIS survey also has
a separate category on routine(non-capital) "plant" expenses, that includes annual maintenance
11-42 56 and utilities.Information on rent is collected under a separate category, called "general" expenses. NAIS does not publish statistics showing any of these categoriesseparately, but does report that total spending on "other expenses," including plant, PPRRSM, generaland five other categories, ranges from about 25 percent of total expenses in elementary day schools, to over40 percent in boarding schools (NAIS, 1993). One-fifth (21 percent) of NAISschools were established before 1900, and one-half (51 percent) before 1950 (McLaughlin et al., 1995).
Conclusion
This chapter has reviewed the current status of data collection on private school expenditures. In summary, the existing data do not allow researchers to estimate total spending on private schools with confidence, compare expendituresof different activities across public and private schools, or compare overall expenditures across different sectors of private schools.
Although data collection methods in the public sector can serve as a model for data collection from private schools, any effort to collect data from private schools must take into account the significant differences between public and private schools, as well as the diversity within the private school universe. Private school finances in many religious private schools are complicated by the flow of donated labor, in-kind contributions, and financial subsidies between school and sponsoring institution. National and private school association surveys to date have collected some information on salaries and benefits in private schools,less information on other current
operating expenditures, and almost no information about capital expenditures. CHAPTER III
TYPES OF EXPENDITURES FOUND IN 28 PRIVATESCHOOLS
Introduction
During the fall of 1995, administrators from an assortment ofCatholic, other religious, and non-sectarian private schools were invited to participate in aseries of focus groups and school-site interviews on private school expenditures. The extraordinarydiversity among private schools was quite evident throughout the interviews. Current operatingexpenditures ranged from less than
$200,000 to over $10 million. Schools differed along many dimensions,including size, grade level, religious affiliation and type of school, organizational structureand autonomy, and scope of services and activities offered to students.
Some of the schools offered basic academic instruction in a simpleclassroom, while others offered students a profusion of academic and athletic activities, healthand counselling supportive services, and instructional materials and resources. Some schools wereadministered by a principal and secretary who worked with a simple budget with only adozen line-items; other schools had a number of different administrative .offices, including abusiness office that developed and monitored a sophisticated budget with hundreds ofline-items. While some schools were located in the Sunday-schoolclassrooms of their sponsoring church, other schools maintained extensive campuses with dormitories and riding stables.Some schools offered a variety of supplementary services and programs, such as busservice, hot meal service, and after- school programs, while other schools provided none.
This chapter describes in some detail the types of expenditurescommonly found in private schools, based on focus group and site-visit interviews with principalsand business managers from 28 different private schools and actual budgetarydata from 10 of the schools. Although we provide some quantitative analysis (principally, the percentageof current operating expenditures spent on instruction, administration, plant, andother activities), the bulk of the chapter focuses on three questions:
What types of activities and services were provided by theschools?
Which activities and services were paid out of school operatingexpenditures as opposed to being provided by sponsoring churches or synagogues, parentfees, public agencies, or volunteers?
How did schools account for different types of expenditures?
The answers to these questions are important for understandingwhat lies behind the numbers in the fiscal records. For example, imagine that aschool reports no expenditures for library services. Does this lack of reported expenditures mean thatthe school has no library, that the school has a library staffed by parent volunteers and donatedbooks, or that spending on the library is buried in the spending for instructional salaries andmaterials? By discussing how services and activities are funded and accounted for in a group of 28diverse schools, we hope to provide examples that can inform the development of strategies for collectingand analyzing data on private school expenditures.
This chapter begins by describing how the 28 schools were recruited tomirror much of the diversity of schools nationwide in terms of size, grade level, andschool type and affiliation.
The remainder of the chapter discusses school activities andexpenditures across a dozen functional areas that are common across many public andprivate schools. Grouping activities by function (i.e., instruction, administration) rather than by the objectcategories used in Chapter II
(i.e., salaries, benefits, supplies) allows us to focus on the types ofactivities and services provided in various private schools. We group these dozen functions into thefollowing four general areas: Instruction-related activities:
Instruction, Instructional support services, and Student support services;
Administration;
Physical plant:
Capital expenditures and rent, and Plant maintenance; and
Other services:
Transportation, Food service, Residential services, Financial aid, Extended day and summer programs, and Other activities.
In Chapter V of this report, we compare our 12-function classification to alternate classifications most notably the categories used in the National Public Education Finance
Survey (NPEFS), the Integrated Postsecondary Education Data System (IPEDS) finance survey,
and the National Association of Independent Schools (NAIS) finance survey and we discuss
some of the conceptual and accounting issues associated withdifferent classification systems and
definitions. Before proceeding further, however, we need to present our definition of "current
operating expenditures," because this term will be used throughout Chapter III when discussing
the percentage of "current operating expenditures" spent on instruction, administration, plant, etc.
Definitions of "current operating expenditures" vary somewhat, depending upon whatactivities are
considered capital rather than current expenditures, which activities are considered expenditures
rather than reductions in income, and which activities are considered core to elementary and
secondary education. For the purpose of creating a common denominator that can be used across
private and public schools, we define current operating expenditures to include expendituresfrom
III-3 60 nine of the twelve functions above, excluding expenditures associated with plant-related capital expenditures and rent, financial aid, and extended day and summer programs. Reasons for excluding expenditures in these functions are offered in the relevant sections of Chapter III, and discussed again in Chapter V.
Diversity of Schools in Our Sample
The 28 schools represented in the focus group and site-visit interviews were selected to include small, medium and large schools; elementary, secondary and combined schools; religious and non-sectarian schools; independent and affiliated schools; not-for-profit and proprietary schools; regular and special education schools; and day schools and boarding schools.
Recruitment of Administrators
As a first step in recruiting administrators representing a diverse array of schools, we contacted representatives of 25 national private school associations and attempted to secure participation from at least one member school of each association. In addition, we tried calling selected local area schools from a listing of schools in the Private School Universe Survey, listed by each of nine types of schools.' A total of 276 calls inviting administrators to attend focus groups resulted in 165 direct negative responses, 41 negative responsesafter requests for additional materials, 50 cases with no response in the time frame, and 20 responding positively.
In the end, 12 administrators actually attended one of three focus groups in October 1995.
These focus groups involved administrators from three different types of schools: Catholic
schools, conservative Christian and other Christian schools, and high-cost schools (boarding
schools, elite day schools, and special education schools). A fourth scheduled meeting with
'The nine types are Catholic parochial, Catholic diocesan, Catholic private, Conservative Christian, affiliated religious, unaffiliated religious, regular non-sectarian, special emphasis, and alternative.
III-4 61 assorted religious and non-sectarian day schools was cancelled because of difficulty in securing sufficient participants prior to the scheduled date.
The next step was to schedule on-site interviews. About two-dozen follow-up phone calls were made to selected administrators from the initial list of 276 contacts. Inaddition, we used the
Independent School Guide for Washington, D.C. and Surrounding Area, a privately published directory of local private schools, to identify a half-dozen additional schools whose names indicated they represented a school type that was otherwise missing from our sample, for example, the Washington Waldorf School, the Evergreen Montessori School, and the Hebrew Day School of Montgomery County. In November and December, we interviewed 16 administrators at their school sites, including one administrator who had briefly attended part of a focus group meeting.
We supplemented the site visit interviews by collecting information in phone interviews. One administrator provided sufficient information over the phone that we added his school to our sample, despite the lack of an on-site interview.
In total, we interviewed administrators from 28 different schools 12 in the focus groups, 16 in the site visits (including 1 duplicate interview), and 1 in a telephone interview.
These 28 schools were quite diverse in size, grade level, and religious affiliation and type of affiliation, as well as across other dimensions.
School Size
The schools in our sample ranged in size from 35 students at a special education school to
800 students at a combined school with three campuses.There were 12 schools with fewer than
150 students, 10 schools with between 150 and 299 students, and 6 schools with 300 students or more. Our sample has a somewhat smaller share of small schools and larger share of medium- sized schools than was found in the Private School Universe Survey (PSS) in 1991-92 (see Table
III-5 62 2.1). Half of our schools were clustered in the rangebetween 100 and 200 students, or between the high end of small-sized schools and the lowend of medium-sized schools. TABLE 2.1
School Size
Sample Sample PSS Size (number) (potent) (percent)'
Small: <150 12 43 54 27 Medium: 150-299 10 36
Large: >400 6 21 19
All 28 100 100
Source: Focus Group and Site Visit interviews, 1995,and Private School Universe Survey, 1991-92.
Grade Level
We interviewed administrators from 15 elementaryschools, 6 secondary schools and 7
combined elementary/secondary schools. Compared tothe national distribution of private schools
in the PSS, our sample somewhat underrepresentselementary schools, and overrepresents
secondary schools (see Table 2.2). TABLE 2.2
Grade Level
Sample Sample PSS Grade Level (number) (percent) (percent)
Elementary 15 54 61
Secondary 6 21 10
Combined 7 25 30
All 28 100 100
Source: Focus Group and Site Visit interviews, 1995,and Private School Universe Survey, 1991-92.
III-6 63 Religious Affiliation and Type of School
The schools in our sample were strikingly diverse in religious affiliationand type of school. We interviewed 6 administrators associated with Catholic schools,representing:
four parochial elementary schools (one of which was interparish),and
two private high schools (one private order, and oneindependent).
In addition, we interviewed 14 administrators of other religiousschools:
two Lutheran schools (one from the Missouri Synodand one from the Evangelical Lutheran Church of America);
six conservative Christian schools (two interdenominational, oneAssemblies of God, one independent Baptist, one southern Baptist, and one NationalChurch of God). Each of these schools was associated with the American Associationof Christian Schools (AACS), the Association of Christian Schools International (ASCI) or Christian Schools International (CSI);
two Seventh-Day Adventist schools (one elementary and onesecondary);
two Jewish schools (one Orthodox and one Conservative);
one Episcopal school; and
one Friends school.
Finally, we spoke with eight administrators representing a variety of non-sectarian schools:
two special education programs (both serving seriouslyemotionally disturbed adolescents);
three alternative schools (one Montessori, one Waldorf, and one member ofthe National Coalition of Alternative Community Schools); and
three independent preparatory schools (including one with a Montessori program for the youngest children).
A complete list of schools and administrators is attached inAppendix D.
Our sample includes a smaller proportion of Catholic schools and alarger proportion of non-sectarian schools than is found nationally (see Table 2.3). The lowershare of Catholic administrators is partly a result of our interest in interviewing at least one administrator from a variety of different types of schools. In addition, we encountered difficulties in securing Catholic school participation in the focus groups and site visits. Our first scheduled focus group, for example, conflicted with an area-wide meeting of Catholic school principals.
TABLE 23
Affiliation
::Sample 'Sample PSS (number) (percent) (Percent)
Catholic 6 21 34
Other Religious 14 50 45
Non-Sectarian 8 29 21
All 28 100 100
Source: Focus Group and Site Visit Interviews, 1995, and Private School Universe Survey, 1991-92.
Our sample can be compared to schools nationwide across other dimensions. Only two schools (7 percent) were boarding schools, mirroring the 7 percent of private schools nationally that have boarding students (McLaughlin et al., 1995). One school (4 percent) was proprietary; the number of proprietary schools nationwide is not known. Four schools (14 percent) were members of the National Association of Independent Schools (NAIS), an overrepresentation in comparison to the 6 percent found nationally (McLaughlin et al., 1995).In addition, two more schools that were not direct members of NAIS were affiliated with the Virginia and Greater
Washington regional associations of independent schools (VAIS and AISGW).
Two differences between our sample and the universe reported in the Private School
Universe Survey merit note.First, all the sampled schools belonged to at least one, and in most
III-8 65 cases, several nationaland regional associations of private schools (e.g.,religious associations, associations of Montessori or Waldorf schools,the NAIS, VAIS, AISGW, the Associationof
Independent Schools of Maryland (AIMS), theWashington Small Schools Association). In
contrast, 20 percent of schools in thePSS reported no private school associationmembership
(Broughman & Bynum, 1994).
Second, our sample is largely drawn from themetropolitan Washington area; 11 were
from Maryland, 9 from the District ofColumbia, and 8 from Virginia. Most schools,therefore,
were located in urban orsuburban areas. (A few of the Virginia schools werefrom more rural
parts of the state, including one schoollocated in the Blue Ridge Mountains). Furthermore,
examples of schools' access to publicly providedservices was limited to the policies represented
in the three jurisdictions. For instance, noschool other than the special education schools
reported that students were transported by publiclyprovided busses, because none of the three
jurisdictions provide such services.
Sub-sample with Expenditure Data
Ten schools gave us copies of financial statementsthat detailed their expenditures. The
ten schools were roughly representativeof the larger sample in terms of size- and gradelevel.
Most (nine out of ten) were day schools. Thesub-sample was also largely religious schools(nine
out of ten). Further description of these tenschools is limited, in order to protect the
confidentiality of their finance data.
Many of the analyses of actual expenditures werebased on seven or eight schools rather
than all ten because three of the finance reportsdid not provide sufficient detail to split
expenditures among the functional categories discussedabove. In addition, we had to make a
number of assumptions in allocating expenditures acrossfunctions in the remaining seven reports.
Despite these limitations, the budgetary data areuseful to give a rough estimate of the share of the
66 expenditures used for instruction-related activities,administration, physical plant, and other functions.
Instruction-Related Activities
Instruction-related activities constitute the bulk of activitiesin private schools. Most of this section of the report focusses on instruction the direct teacher-student interactions that occur primarily inside the classroom.Instruction expenditures include teacher salaries, teacher benefits, textbooks, classroom supplies, and contractedtutorial services. In addition, this section covers instructional support services such as library services and staff development because many private schools consider suchservices to be part of the broader category of instruction- related activities. This section also reports on a third typeof services, student support services such as student counselling or student health services which are often associated with instructional activities because they involve direct staff-studentinteractions. The section concludes with a quantitative analysis of instruction-relatedexpenditure data from eight private schools.2
Instruction
Instruction is the primary function of private schools.It is such a broad functional area
that the following discussion is broken down into three components:
Teacher salaries;
Teacher benefits; and
Other instructional expenses, i.e., supplies such as textbooksand purchased services such as tutorial services.
2Two of the ten budgets were not used in analyzing instruction-related expenditures.One did not distinguish between instructional salaries and other salaries, and theother was a partial budget, with no information on instructional expenses other than salaries.
III -10 This organization mirrors the object classification, (salaries, benefits,supplies, services, etc.), found in NPEFS and many other finance surveys.
Teacher Salaries
Teacher salaries are the core component of instructional expenditures.Most respondents from small schools stated that they could calculate total teachersalaries by summing their totals for regular teachers, specialized teachers (such as art, music,band or part-time teachers), and substitute teachers. Most respondents from large schools had a totalfor faculty salaries, or could compile a total across the different academic departments or schooldivisions or campuses.
School definitions of "teachers" or "faculty" sometimesdiffered from the NPEFS definition used in our draft surveys. For example, one business managerdid not include salaries for coaches in his total for faculty salaries. Most school administrators said thatthey probably could report teachers' salaries separately from salaries for librarians, nurses, andcounsellors, if requested to do so. However, such distinctions were notusually made in reports prepared by the school.
A few schools had particular circumstances that complicated thereporting of teachers' salaries. In two small religious schools, for example, the "schooloperating budget" controlled by the principal was separate from the "teacher payroll budget' paiddirectly out of the church or parish office. In one of these schools, the principal, who was new,had not seen the teacher payroll budget. In addition, some of the smaller schools listedteachers' salaries by name in attachments to the budget, and principals expressed concerns aboutreleasing personal salary information, which they believed was confidential.
In other schools, reported salary expenditures did not cover thefull range of instructional services provided by the school. For example, a few schoolssupplemented teacher salaries with parent-funded tutors or publicly funded services, particularlyin the area of special education.
Other schools benefitted from some free labor, such as the useof parish priests to teach an
68 occasional class at the parish school, or the useof parents or church members to serve as substitute teachers.
In addition, a few Catholic schools in our samplebenefitted from labor provided by nuns at below-market rates, that is, for astipend that is lower than a lay person's salary. Financial reports by the National Catholic EducationAssociation estimate the value of "contributed services" by religious personnel, that is, the differencebetween a religious and lay person's salary, as 3 percent of total spending.Some administrators of other religious schoolspointed out that many of their teachers alsoviewed their work as a ministry and were willing to work atbelow- market rates. When all teachers are paid the same rate,however, it is nearly impossible to quantify the potential value of "contributed services."
The focus group and site visit interviews includedquestions about special education teachers, under the theory that instructional salarieswould be lower in schools that did not provide special services for students with learningdisabilities. Nine schools, or about one-third of those surveyed, reported employing full-time orpart-time teachers or contracting for tutorial services in order to meet specialized learning needs. The typesof schools funding such services varied significantly, including two very expensive-specialeducation- schools and two low-cost religious schools that were committed to meeting theneeds of all the children in their congregation or parish. In one of the nine schools, thebudgeted expenditures for the special education teacher were raised by the parent-teacherorganization.
The remaining two-thirds of surveyed schools had noexpenditures for special education in their operating budget. Several of these schools,however, were able to provide some services to children with learning disabilities, through such arrangements asworking with the public schools in scheduling testing or other specialized services,providing free space to parent-funded tutors, sending needy children for one period a day to a publiclyfunded (Title I) mobile classroom
III-12 69 parked outside the school, and providing a special education teacherthrough a special foundation grant.
Difficulties arose over the definition of "special education." Twoschools had Title I mobile classrooms, which though not defined as special educationclassrooms, nevertheless served many children with learning disabilities.Services offered by specialized teachers and consultants included occupational therapy, curative eurythmics (a disciplinein the Waldorf tradition), reading resource assistance taught by a part-timelibrarian who was in the process of obtaining a degree in special education, and classes taught by teachers with degreesin special education. Furthermore,
one business manager viewed"special education" as a pejorative service; he started to say his
school had no such services, until he remembered that the schoolemployed a full-time teacher to
work with children with learning disabilities. Another administratorexplained he was obliged to
state that he had no special education because hedid not provide the services specified under the
Individuals with Disabilities Education Act (IDEA). Finally, manyadministrators mentioned that
the small classrooms, orderly atmosphere, and individualizedservices provided in their schools
enabled them to meet the needs of children with a broad rangeof learning styles and behavioral
problems.
Teacher Benefits
After instructional salaries, the next largest category of instructional expensesis generally
teacher benefits, including payroll taxes, health benefits, retirementbenefits, and other benefits.
Payroll taxes. Most schools paid the standard FICA taxes for socialsecurity and
Medicare, or 7.65 percent of payroll. A bookkeeper at a religiousschool explained that because
the school was legally incorporated under the church, itcould have chosen not to pay into social
security. A Catholic school principal noted that one of its employees was a nunfrom a convent
that did not accept the social security tax payments; the parishadministrator insisted, however, on
III-13 70 paying the equivalent of social security taxes directly to the nun. Socialsecurity taxes were not paid for four Lutheran teachers in one school because their certificationby the Synod placed them in a similar tax status to that of a pastor, minister, or rabbi. Schoolsdid not pay social security taxes for substitute teachers or some hourly teacherssuch as instrumental music teachers.
Health benefits. Teachers and other employees in all but two of theschools in the focus groups and site visits had access to healthbenefits. The most common model was for the school to pay the full costs of health benefits. Severalschools, however, required employees to contribute between 20 and 50 percent of employee health premiums, and anadditional group of schools required employees to pay for high coverage and/or family coverage.The two Seventh-
Day Adventist schools in our sample reported that health benefits(and other fringe benefits) were provided by their centralized education system. Each Seventh-Day Adventistschool paid into the centralized salary and benefit system according to the number of teachersemployed and a system- wide schedule for teacher salaries. The centralized system disbursed payrollchecks directly to the teachers, and subsidized the cost of health and other employee benefits.
Among other religious schools, health benefits were sometimes paid for by theschool but
administered by a regional or national association, such as archdiocese or Christian Schools
International (CSI). One administrator noted that the primary reason his school hadjoined
Christian Schools International (CSI) in addition to the Association of ChristianSchools
International (ACSI) was because of the benefits of the CSI group healthplan. Other religious
schools, as well as most non-sectarian schools, purchased their healthbenefits through
independent agents.
Retirement benefits. Four of the surveyed schools did not provide any retirement
benefits, including the two schools without any health benefits. In anadditional four schools, the
pension plan was limited to an employee option of making unmatchedcontributions to a tax-
111-14 71 sheltered annuity. Another school provided acafeteria plan where employees could select tax-free payments for retirement (or dependent careexpenses) in place of health benefits. The majority of
the schools, however, contributed to pension plans.Several religious schools covered school
employees under the same pension plan as other church or synagogueemployees. Several
independent schools had Teachers Insurance and AnnuityAssociation/College Retirement Equities
Fund (TIAA-CREF) plans and supplemented directemployer contributions to the retirement plan
with an employer match of employee contributions.
Other benefits. Many schools provided employees withadditional benefits, including
unemployment, sick leave, long-term disability, workers'compensation, and tuition reductions for
employee children. Among the 16 schools that providedinformation about tuition reductions, 11
offered reductions, and 5 did not. However, two principalsof schools without a policy of tuition
reductions noted that there were no qualifying teachers, and thepolicy might be reconsidered if
the occasion arose in the future. Several schoolsoffering reductions noted that this was a
significant benefit for employees; two schools offered a 100 percentdiscount on tuition. One
business manager explained that reduced tuition for employees'children could be classified as
either an employee benefit or a form of financial aid;-he-classified it as an employee benefit,
following the guidance of the National Association of IndependentSchools (NAIS).
As a final note on benefits, the two boarding schoolsin our sample provided subsidized
housing to employees. There was considerable discussionin one focus group about whether on-
campus housing should be viewed as anemployee benefit or a sometimes onerous condition of
employment. (According to some focus group participants,the IRS is interested in classifying
subsidized housing as a taxable form of compensation). Other Instructional Expenditures
In addition to teacher salaries and teacher benefits, other categoriesof instructional expenditures found in private school financial records include textbooks(sometimes labelled books, workbooks, or curriculum); classroom supplies, which is a separateline-item in many budgets, sometimes reported by grade or department; art and musicsupplies; and testing. One of the schools that submitted budgets with detailed instructional expenseshad a line-item for "other contracted instructional services," presumably tutorial services.
Administrators in the focus groups and site visits were asked todescribe how textbooks,
the most common instructional supply, were provided andfunded. Of the 20 schools with clear
responses to this question, 16 had significanttextbook expenses in their operating budgets,
including 7 schools that provided books purchased with tuition revenues,7 schools that provided
books funded through a book or activities fee, and 2 schools that hadschool bookstores whose
expenses were included in the operating budget.Many schools used a mixture of softcover and
hardcover texts and workbooks, with the hardcover texts typically retainedby the school at the
end of the year and replaced over time according to a regular cycle.
Four schools had minimal textbook expenditures -in -their operatingbudgets. Two of these
schools, both boarding schools, had school book stores that were separateenterprises whose
expenditures were not considered part of the school's operating expenditures.Instead, the net
revenues of the bookstore (revenues less expenses) wererecorded on the income side of the
school's financial records. The other two schools were a Waldorf school and aMontessori school,
neither of which used many regular textbooks in their educational programs.The financial
records of the Waldorf school included substantial expenditures for rawmaterials (such as natural
papers, wood and cloths) that were used by thestudents in making their own textbooks.
Likewise, the Montessori school had few expenditures for textbooks per se, butsignificant
111-16 73 expenditures for purchasing the specialized Montessori instructionalmaterials that are used to
teach the younger children.
Four schools, all located in Maryland, reported receivingtextbooks or library books
through a publicly funded program. One of these schools includedthe revenues and expenditures
associated with these books in the school's financial records. Inthe other three schools, the grant
or books came directly to thelibrarian, and was not recorded by the business manager. In
general, the business managers and administrators appeared tohave limited information about
their eligibility and participation in any publicly-funded programs.
Instructional Staff Support Services
Many private schools had expenditures that could beclassified as instructional staff
support services primarily related to libraries and staff development.
Libraries
Most schools had a designated library, media center or resource room.Schools provided
varying levels of staff support, however. In 30 percent of thefocus group and site visit schools,
the library had no regular staff, but was staffed by regularteachers or parent volunteers. These
schools thus had minimal or no expenditures- that could. beclassified as salary and benefit
expenditures for instructional staff support. One school contractedwith a consultant who provided
librarian services to this school, as well as a few other local areaschools. Among the schools that
did employ librarians, their salaries and benefits weretypically grouped with instructional salaries.
In fact, in many small schools, the part-time librarian orcoordinator of library volunteers was also
a part-time teacher.
It appears that some administrators would find itdifficult, though not impossible, to report
the librarian's salary separately from teachers'salaries. In some cases, the administrator would
need to look up the individual person's salary.Reporting the librarian's benefits separately would
7 4 be an even more difficult task, however, because most financial records do nottrack benefits by individual.
Library supplies books, periodicals, and other materials were easy to identify in some private school's financial records. Three outof the eight detailed budgets submitted by private schools had separate line-items for such expenditures. Library-related expensesof the remaining five schools could not be determined. Four of the five without suchexpenditures were small religious schools that may not have purchased library materials that year.The fifth was a large school that presumably did purchase some library or media centermaterials; such expenditures were probably included in the total for "Supplies" for "Education programservices," although they may have been included in the total for "Supplies" for "Management andGeneral
Supporting Services."
Some schools supplemented library materials with donated books. Two schoolsin the site visits used parent or grandparent birthday clubs to encourage family involvementin the school
and to expand the school library. Parents in one school, and grandparents inthe other, were
encouraged to buy a book for their child or grandchild on his or her birthday. Afterremaining in
the child's classroom for a week, the book would be-given to the-library, inthe name of the child.
In one school, the revenues and expenditures for the birthday club books wererecorded in the
school's financial statements; in the other school such book purchases did not appear tobe tracked
there. A few other schools reported receiving donated books for theirlibrary, but this did not
appear to be a significant source of books for mostschools.
Staff Development
In-service training, professional development, continuing education orteacher conferences
appeared to be a more common instructional support expenditure thanlibrary services. A line-
item or line-items for such expenditures were reported inall but one of the eight detailed financial
III-18 7 5 records, including some simple records with fewer than 20 budgetary items.Most schools had staff development as a separate functional category; others reported it as aline-item within instructional, administrative, or staff expenditures. Many private schools arranged tosend teachers to workshops at regional conferences of their religious ornon-sectarian school association.
Student Support Services
Expenditures for student support services such as salaries and benefits for nurses or counsellors, supplies for first-aid, or contracted services for eye and ear exams orcounselling
services did not figure prominently in most private school budgets.
Health Services
Only five of 27 schools reporting on student health services had school nurses(including
three day schools and both of the two boarding schools in our sample). Theremaining schools
relied on headmasters, secretaries, teachers, athletic trainers, the infirmary atthe neighboring
monastery, the urgent care clinic up the street, or parent volunteers toperform such various health
functions as applying bandages, comforting sick children, attending to injuries, andchecking for
head lice.In several schools, a secretary, teacher or-administrator happened to have anursing
degree, and so served as a nurse in addition to her other duties. In such cases,expenditures for
health services might be limited to minor expenditures for first-aid supplies.Two of the eight
detailed financial reports had separate line-items for first-aid or health caresupplies.
In addition, several schools mentioned that vision and hearingscreening exams were
provided on the school campus, through visits by county staff, orparent-funded private services.
Counselling Services
Private school provision of counselling services was harder to determine.Several
administrators were unsure what was meant by "guidance counselling services,"which one
III-19 7 6 administrator felt was a public school term. Using a broad definitionof counselling to include college counselling, student and family counselling, and referral toother social services, 13 out of
21 schools reporting on counselling services had expendituresfor such services in their financial records. Five of these schools employed full-time counsellors,including the two schools for emotionally disturbed youth. Both those schools consideredone-third of their program staff to be providing counselling/social work services as opposed todirect educational services. Five schools
employed part-time counsellors, including two schoolswith family service counsellors for
immigrant families and one school which assigned a teacher tocollege advising duties for two
periods a day. Three schools used contracted services. In oneCatholic school, the "contracted
services" were provided by a charitable, diocesan-wide, child andfamily counselling agency that
received only part of its funding from the school "donations" or contract.
The eight schools without separate counselling staff or servicesvaried significantly, and
included elementary, combined, and secondary schools, as well asboth religious and non-sectarian
schools. A number of administrators of these schools noted thatcounselling and attention to
character development was the shared responsibility of the head andall teachers. None of these
eight schools had salaried nurses either, and so could be-expected-to report no salary expenditures
associated with student support services, and little in the wayof non-salary expenditures.
Analysis of Instruction-Related Expenditures
In the aggregate, instruction-related expenditures instruction, instructional staff support,
and student support services accounted for an average of 71 percent of current operating
expenditures among eight schools that submitted detailedbudgets. Such expenditures ranged from
79 percent of current operating expenditures in a small,low-cost religious school to 62 percent in
a school that provided a fuller rangeof services, including transportation and meal service.The
7 7 71 percent average reflects budgets from eight dayschools; incomplete data from a boarding school suggests that instructional expenditures are alower share of the total at boarding schools.
We could not split instruction-related expenditures intothe three separate categories used in the NPEFS on the basis of the information availablein the eight budget reports. Information gathered in the focus group and site visit interviews suggest,however, that most of the 71 percent was spent on direct instruction ratherthan on instructional staff support or student support services. We were able to split expenditures amongsalaries, benefits and other expenditures (i.e., supplies and contracted services).
Among the eight schools, instruction-related salaries(largely teaching salaries, but including some salaries for librarians, counsellors andnurses), averaged 57 percent of current operating expenditures, ranging from 50 percent to 67 percent.
Payroll taxes and benefits averaged slightly under 9 percent,including 4 percent for payroll taxes and 5 percent for health, retirement, and otherbenefits. (As with figures on teacher salaries, this figure is primarily related to teacher benefits,but also includes a small proportion of spending on instructional and student support staff). Measured as apercentage of instruction- related salaries, fringe benefits increased salary costsby -15 percent, including about 7 percent for payroll taxes and 8 percent for health, retirement andother benefits. These estimates are based on actual instructional benefits in four schools. Teacherbenefits were estimated in the other four schools by assuming that total employee benefitsand payroll taxes were distributed among instructional staff, administrators, custodians, and otheremployees in proportion to their salaries.
Expenditures for instruction-related suppliesand services averaged 6 percent across the eight schools. This estimate probablyincludes significant spending on instructionalstaff support,
as well as instruction,because many schools had expenditures associatedfor library materials and
III -21 78 staff development. Staff development ranged from 0.3 percent to 1.1 percent of operating expenditures in seven schools that reported such expenditures in their detailed financial records.
After instruction-related activities, the next largest category of expenditures in many private schools is administration.
Administration
Administration includes the activities carried out in the principal or headmaster's office, the business office, development office, admissions and recruiting, alumni affairs, andother administrative offices. Administrative expenditures are driven by the salaries and benefits for administrators and support personnel in these offices. In addition, there are expenditures for office supplies (e.g., paper, photocopying, postage) and purchased services (e.g., accounting services, legal services, and insurance other than plant-related insurance).
An overview of administrative staffing models is presented below, followed by a discussion of administrative salaries, benefits, and supplies and contracted services. The section concludes with a short analysis of the proportion of current operating expenditures devoted to administration in eight private schools.
Staffing Models in Private School Administrative Offices
Our focus groups and site visits included a number of questions about the size and sophistication of administrative offices, because we were hoping to obtain information about the principals, business managers, and church officials who had access to the financialinformation needed to respond to a survey on school finance.It quickly became apparent that schools with a two-person administrative office (principal and secretary) werequite different from schools with a large administrative office with a separate headmaster's office, business office,and other administrative offices. Out of 23 schools reporting on the size of their administrative staff, seven
III-22 79 schools were administered by a principal and secretary and six schools had a number of administrative offices and a correspondingly large administrative staff. The remaining 10 schools fell between these two staffing models. The intermediate model had three to six administrative staff members, typically consisting of a principal, a secretary, a business officer or bookkeeper, and, in some cases, a part-time assistant principal, a part-time development officer, or additional clerical support.
Two-person Model
The seven schools with a two-person staffing model included Catholic, Lutheran, and conservative Christian schools, and generally charged lower tuition fees than most other schools.
Enrollment in these schools ranged from 80 students to 230 students. The principal/secretary administrative model was found in 30 percent of our sample, which is probably a lower percentage than across the country as a whole, because of the low proportionof small elementary and Catholic elementary schools in our sample. Both the principal and secretary worked full-time in five of our schools; in one the secretary worked two days a week, and in one the principal was considered a half-time teacher and a half-time principal. None of these schools were membersof the NAIS, and in general, the financial reports were quite simple: In most of these small and medium-sized religious schools, a parish administrator or church or synagogue bookkeeper performed a number of financial functions that supplemented the work of the two-person administrative staff.In fact, two out of the seven interviews at these schools were conducted with the parish administrator or the chair of the church education board, to whom we were
referred after an initial inquiry to the school principal's office. The time spent by the churchstaff
and congregation members was not quantified or accounted for in financial records in anyof these
seven schools. Intermediate Model
The intermediate, or three-to-six person, staffing model was found inelementary, secondary, and combined schools, and across schools that ranged in sizefrom 75 students to 600 students. Half of the 10 schools in this group received administrative supportfrom a sponsoring church or synagogue or parish, including four schools (two Jewish and twoconservative
Christian) that had formal arrangements for paying for a share of the synagogue orchurch bookkeeper's salary out of the school budget and one school (amedium-sized Catholic school
with 2.5 administrative staff) that received considerable unquantifiedassistance from the parish
administrator. The remaining schools in this group included threenon-sectarian, alternative
schools, and two relatively independent religious schools (oneconservative Christian and one
Friends). One of the principals in this group 'carried a half-time teaching loadin addition to
administrative responsibilities, but this appeared to be a temporary measureduring a difficult
transition period. In all but one case, the principals in these schools chose to meetwith us
directly rather than referring us to their bookkeeper or business manager.In most cases, however,
the principal was unable to answer the questionnaire completelywithout the assistance of the
bookkeeper or business manager.
Separate Business Office Model
The final group of schools was those schools with a sufficiently largeadministrative staff
to have a separate offices for school administration,business administration, and, in most cases,
development, academic or student affairs, and admissions and recruitment.These schools were
secondary or combined schools that charged relatively high tuitionfees and ranged in size from
about 200 to 500 students, except for a special education schoolwith 100 students. In each of
these schools, we interviewed the business manager or assistanthead of the school, and had little
or no contact with the headmaster.Business managers appeared to have a greater interest in our
81. project and more flexible work schedules than principals, and so schools with separatebusiness offices may be overrepresented in our sample 6 of 23 schools reporting on size of administrative staff. Most of the business managers were quite aware of recentchanges in private school accounting methods (e.g., the Financial Accounting Standards Board(FASB) changes); many of them were members of the NationalAssociation of College and University Business
Officers (NACUBO), NAIS, or regional associations of independent schools.
Although administrative staffing patterns varied across the schools in oursample, all schools had administrative expenditures in each of the following areas:salaries, benefits and other current expenditures.
Administrative Salaries
Confidentiality concerns were readily apparent during discussions of administrative salaries, even though our interviewers did not probe for actual salary information.Some administrators of small schools appeared troubled by the possibility that their personalsalary might be revealed to the interviewer. Some small school accounting systems,in fact, report the administrator(s)' salaries on a separate line from that of the clerical staff, increasing thechances of exposing individual salaries. To avoid this, some -small schools -report-administrator and teacher salaries together, with a separate line item for clerical staff.
Another issue related to administrative salaries is that most administrators ofprivate schools do not spend all their time on strictly administrative functions. The vastmajority of administrators in our sample had some teaching responsibilities, ranging from anoccasional class to a half-time teaching load. Although some schoolsallocated a share of the administrators'
salaries to instructional expenditures (including the two schools withprincipals who taught half-
time), others did not. One principal noted that his school had recently reducedits stated
administrative costs by calculating the share of administrators' time that was spent oninstruction.
III-25 82 By doing so, it enhanced its image ofadministrative efficiency to potential donors participating in the Federal Combined Campaign fundraisingdrive. Another administrator pointed out that although his financial records did not estimatethe value of instruction provided by administrative staff, this potential error was probably balanced bythe value of administrative duties provided by teaching staff.Finally, a number of administrators noted that manyof their duties fell outside the administrative or instructional functions, (e.g., checkingfor head lice, unstopping clogged toilets, transporting children on field trips, etc.), although no oneproposed allocating such time to -student
support, plant maintenance, or transportation.
Finally, some principals of religious schools allocated someof their time to non-school
activities in the sponsoring church or synagogue.For example, the principal of one of the
conservative Christian schools in our sample was expected tospend 60 percent of his time on
school administration and 40 percent on his position asassistant pastor. His salary was paid out
of the school budget, and his housing was fullysubsidized by the church. In this example, the
free housing subsidized by the church may offsetthe time devoted to church activities. In other
cases, however, time devoted tochurch or synagogue activities or benefits providedby the church
or synagogue may representhidden subsidies' that may be-hard to capture in a surveyof private
school finance.
Administrative Benefits
Administrators generally reported receiving the samehealth and retirement benefit package
as teachers. There were anumber of differences, however, in other typesof benefits. More
administrators than teachers were members of the clergywho had the option of not paying social
security or federal unemployment taxes.Moreover, the compensation package of someprincipals
who were members of the clergy included asubstantial tax-exempt housing allowance, or
"parsonage." One principal noted the problems hehad encountered in qualifying for a mortgage
83 when the bank officer initially ignored the $20,000 he received in parsonage income.
Furthermore, a few administrators noted that when joining the school, they had negotiated larger tuition reductions for their children than was provided to teachers. Finally, as noted above, one
Christian school in our sample provided subsidized housing to the principal/assistant pastor a benefit not available to teachers in that school.
Some of the benefits provided to administrators were not recorded as employee benefits in all private school financial records. For example, although some schools followed the NAIS recommendation of classifying tuition reductions as an employee benefit, some schools simply showed it as a reduction in tuition income. Subsidized housing was another benefit that was frequently not recorded as an employee benefit.
Other Administrative Expenses
Other administrative expenses consist of administrative supplies and contracted services.
Most schools reported the same basic administrative functions, although they reported them in different ways.
Nine schools submitted financial records with sufficient detail to examine non-salaried administrative expenditures.3 All nine records had separateline-items for-office supplies. Eight had separate line-items for advertising (or public relations) and for telephone. One simple financial record listed only these three types of administrative expenditures, and a second combined them into two items: "office supplies/postage/telephone" and "advertising." The next most common items were postage (seven schools) and printing or photocopying (six schools).
3These nine schools include the eight schools analyzed in the chapter on instruction-related expenditures, and a ninth school that provided detail on administrative supplies, though not on administrative salaries.
111-27 84 Four of the nine budgets included expenditures for accounting services. Many of the administrators in the focus groups and site visits reported contracting out for payroll, accounting, and other financial services. Cost considerations were cited as reasons both for and against contracting out for financial services. Some administrators believed they saved money by having monthly financial statements prepared by an accountant; others spoke of the savings couldbe achieved by moving to an in-house financial system. Schools that contracted out for payroll services frequently cited the convenience of direct deposit of employee salaries as thedeciding factor in their decision.
The degree of financial review provided by outside auditors or accountants varied considerably. Some schools underwent an annual audit involving three weeks of intensiveon-site review; others were counselled by their accountant that a less formal annual review wassufficient.
Most of the independent schools considered a full-fledged audit to be essential; smallreligious schools were more likely to rely on less formal reviews by their accountant, the church or synagogue comptroller or treasurer, or the financial divisionof the archdiocese. Although most schools used local accountants, one Christian school contracted with a Tennessee-basednational accounting firm used by many conservative Christian-schools: -The two Seventh-Day Adventist schools reported receiving technical assistance and review from accountants sent out bythe
national headquarters of the Seventh-Day Adventist educational system.
Two schools in the subsample budgeted for legal expenses. A Catholic school principal
explained that Catholic schools relied on the archdiocese to provide any needed legalservices.
One small school noted that legal services were available through the localassociation of
independent schools; the first 15 minutes of service were free, and the schoolpaid for additional
time. Variations in accounting systems made it difficult to classify all administrative expenditures in a comparable manner. For example, one school in the subsample reportedall insurance (plant, liability, vehicle, etc.) as a plant expenditure. Two other schools reported a separate line-item for liability insurance, allowing us to classify suchexpenditures as administrative. In another example, one school included computer support costsin its line-item on Administrative Equipment. Three other schoolshad separate line-items for computer maintenance or supplies that we classified as administrative expenditures.
One school budget allocated expenditures for postage, photocopying andsupplies across administrative and instructional functions; most other schools considered all suchexpenditures as administrative expenditures. Four of the nine schools with detailed financial reportsreported expenditures for development or fundraising separately from other administrativeexpenditures.
The variation in ways to report administrative supplies and services made itdifficult to define administrative expenditures in a way that is strictly comparable across allschools. Small differences in reporting methods are unlikely to have made a major difference to analysesof total school expenditures, however, because of the relatively small proportion of schoolbudgets devoted to administrative supplies and services.
Analysis of Administrative Expenditures
Administrative expenditures averaged 21 percent, according to detailed financial reports
submitted by eight schools.4The 21 percent average includes 15 percent for administrative
salaries, 3 percent for administrative benefits, and 4 percent for supplies and purchasedservices.
Four of the eight schools reported payroll taxes and benefits separately foradministrative
staff and instructional staff. We analyzed these data in order to see how theratio of reported
'these are the same eight schools included in the analysis of instruction-related expenditures.
III-29 56 benefits to salaries compared across administrativeand instructional functions. In two of these schools, the ratio of benefits to salaries was lowerfor administrators than for teachers. In one of these schools, this reflected the fact that theadministrative staff received the same health package as teachers (a $2,000 benefitfrom a cafeteria plan), but received higher salaries,resulting in a lower ratio of benefits to salaries. In a thirdschool, benefits were a constant percentage of salaries across education and general administrativefunctions, but were a lower percentage of salaries for social work personnel.5 (The fourthschool paid similar ratios of payroll taxes to salaries, but had no expenditures for benefits,because it was a Seventh-Day Adventist schooland its teachers received benefits through thecentralized system).
Administrative costs varied considerably as aproportion of current operating expenditures among the seven schools.Administrative salaries ranged from 9 percent to 22 percentof current operating expenditures, and total administrativeexpenditures ranged from 14 percent to 31 percent. School size may account for someof this variation. Administrative expenditures inthree large schools (defined as having an enrollmentof more than 300 students) ranged from 14 to18
percent of total expenditure. Administrativeexpenditures in the remaining schools were 18
percent or more, except for one smallschool that had lower expenditures because itemployed a
part-time principal and was heavily supported bychurch staff and congregation members.
Even wider variations in expenses are found in thethird general area of school
expenditures those associated with the school buildings andgrounds.
5General administration in this school included plant maintenanceand food service, as well as administration.
III-30 87 Physical Plant
School spending on the physical plant is difficult to categorizeand analyze because of differences in amounts and types of expenditures. Someschools incurs substantial rental payments, while other schools own their owngrounds and buildings. Owners of facilities may be making principal and interest payments to retirelong-term debt, or may already have paid off all mortgages. A third set of schools makes neitherrental nor mortgage payments because they are provided free space by a sponsoring institution. Overone-third of the schools interviewed in the focus groups and site visits were provided free spaceby their sponsoring church or synagogue or parish, half rented or leased facilities, and slightly underone-fourth owned their own buildings.
(These arrangements total to more than 100 percent, because twoschools had different arrangements across multiple campuses).
Renters and beneficiaries of free space, as well as owners, maybe responsible for making substantial repairs and renovations to school buildings and grounds,depending on the terms of agreements with landlords or sponsoring institutions.Some schools set aside funds for future expansion. In addition, all types of schools are likely topurchase equipment. Finally, all schools must make arrangements for ongoing plantmaintenance such as custodial services and utilities.
This section begins with a discussion of the capitalexpenditures and rental payments associated with the plant. Next comes a discussion of plantmaintenance costs. The section concludes with an analysis of expenditures for plant-relatedactivities.
Capital Expenditures and Rent
We asked administrators questions about fourdifferent kinds of capital and rental
expenditures associated with their school.First, what were the costs for acquiring or renting the
buildings and grounds? Second, did the school purchaseequipment or receive donated
equipment? Third, who paid for building renovations? Fourth,did the school have a reserve for
III-31 88 future acquisition, construction or expansion?The responses to these four questions are discussed below, followed by a brief explanation of why such capital expendituresand rental payments were excluded from our proposed definition of currentoperating expenditures.
Plant Acquisition and Rent
School administrators reported three general types of facility arrangements:
Ten schools occupied space provided rent-free by their sponsor;
Fourteen schools rented space; and
Six schools occupied space owned by the school.
There were a total of 30 arrangements across 28 schools because oneschool owned one campus and rented two others, and another school rented one building at areduced-rate from a supportive church and paid full-market rates for a second church building.
Rent-free Space. The ten schools receiving rent-free space included the Catholicand
Lutheran elementary schools in our sample, as well several Seventh-DayAdventist and conservative Christian schools. In the Catholic and Seventh-Day Adventist schools,the mortgage payments had been paid off and the titles of the school building wereheld by the diocese or centralized Adventist system, rather than the local -church.It was thus somewhat of a matter of interpretation whether they were "school-owned buildings" with no remaining mortgage payments or "church-owned buildings" rented at no cost tothe school.
Rental Arrangements. The fourteen arrangements for renting space included three schools renting from commercial landhirds, two schools renting fromchurches or synagogues with which the school had no affiliation, four schools renting old public schoolbuildings from county
or city agencies, and five schools renting spacefrom their sponsoring church, synagogue, or
monastery. Five schools paid below-market rents,including two schools renting from sponsoring
churches and three schools renting from cities or counties; two of theschools renting from
III-32 89 Montgomery county faced higher future rents because of a recent county decision to reassess properties and raise rents to reflect their full-market values.
There were interesting twists to the rental arrangements between schools and sponsoring institutions. In one church-sponsored school, the "rent" transferred from the school to the church was viewed as a means of repaying the church for its investmentin the school. The "rent" had recently increased by 67 percent, an increase that was determined more by the excess in school revenues over expenditures than by the value of the schoolbuilding. Another sponsored school was attempting to persuade its sponsoring institution to putschool "rental" payments in a special fund for building-related capital expenditures, rather than "lose it" in the overall institutional operating budget. In a third school, the below-market "rent" paid by the school was estimated to cover the school's use of the custodial and utility services, with nocharge for the space itself.
School-owned Property. The six schools that owned their own buildings included four schools that were paying off mortgages or bonds associated with acquiring or expanding the school buildings and two schools that had already paid off their mortgages. These six schools included two boarding schools, two elite day schools, and two conservative Christian schools. A seventh school, a special education school, while not-owning its own property, was paying a mortgage on major leasehold improvements to buildings and grounds leased from the county.
One fundamentalist school paid 50 percent of the mortgage payments for a set of buildings that were heavily used by both the church and the school. (For example, the Algebra Iclassroom
doubled as a nursery on Sundays, as was evident by the cribs pushed to the side during theschool week). The 50 percent share was based on the assumption the school used the building for 5/7of
the week and 9/12 of the year, or 54 percent of the time. As in other cases where thechurch and
school are legally and financially intertwined, it is hard to say whether the payment from the school budget was a share of the mortgage payment, or a paymentof "rent" to the church that paid the mortgage.
Equipment Purchases and Donations
Many of the private schools we interviewed had separateline-items in their financial records for equipment, such as furniture, computerequipment, office equipment, or vehicles. A few schools, including the one proprietary school,recorded an annual expense for equipment depreciation. Some schools did not distinguish equipmentpurchases from expenditures for supplies. Other schools had separate plant orequipment funds for making purchases of equipment over a certain dollar amount.Several schools used a combination of different methodsfor accounting for equipment purchases.
As a first step in understanding equipment purchasesand donations, we asked schools to describe the equipment acquired in the preceding year,regardless of how such equipment was recorded in their financial statements. All but twoschools in the larger sample of focus group and site visit interviews had purchased some newequipment in the preceding year. Annual expenditures ranged from less than $1,000 to over$100,000. The smaller purchases generally represented purchases of minimal office equipment.Intermediate purchases involved new classroom furniture or vehicles for transporting students onfield trips. The most common high- cost purchases were for new computer orscience laboratories.
The two schools with no equipment purchases included oneschool in serious financial hardship and one relatively new school that dependedlargely on donated equipment to furnish the classrooms and offices. Neither principal could recallmaking any equipment purchases in the preceding year, nor could they find equipmentpurchases itemized on the budget, but they were not absolutely sure that there had been none. Almost all private schools reported receiving donated suppliesand equipment in addition to equipment purchased with school funds.There was near universal participation in the supermarkets' promotional programs offering computer hardware,software, and other items in exchange for grocery receipts. In addition, many schoolsreceived significant donations from parent-teacher organizations and individual parents, as well asfrom other sources. Donations included copiers, fax machines, office furniture, computers,software, and playground equipment, as well as unsolicited donationssuch as pianos. A number of site visits took place inoffices furnished with old office furniture discarded from arelative's down-town office.
Building Renovations
In addition to acquiring equipment through purchases anddonations, many schools had expenditures associated with capital improvements to the schoolbuildings and grounds. Projects
undertaken within the last year included replacement ofboilers, replacement of roofs,
reconstruction of buildings after fire damage, installation ofair-conditioning, replacement of
windows, repaving of a parking lot, remodelling of classrooms,replacement of bathroom tiles, and
upgrading of doors to meet fire codes.
Some projects, such as a $100,000 project to replace 100 windowsin a century-old
Catholic school, were carried out on a multi-year schedule becauseof the school's inability to
afford the entire renovation in one year. Other projects,such as remodelling classrooms, were
considered normal summer activities in some schools, andthus more of an annual maintenance
cost than a special renovation cost. A numberof projects were financed through special fund-
raising drives, such as a one-time golf marathon to equip a computerlab, additional appeals to
members of the congregation to replace a roof, parent-teacherorganization campaigns for
playground equipment, and direct appeals to a few largedonors to replace $25,000 in reserve
funds spent on an unanticipated purchase of a newboiler.
III-35 92 Some schools budgeted a set amount of funds for propertyrenovations, either through the formal Provision for Plant Replacement, Renewal, and SpecialMaintenance (PPRRSM) fund recommended by NAIS, or through a decision to allot a certaindollar amount to capital improvements per year. In the latter case, the business managerwould typically sit down with the headmaster to make an annual selection of the highest priorityprojects from a wish-list of desired capital improvements. One parish administrator expressed analternative approach: expenditures for major building repairs could not be accurately projected aheadof time and so were best dealt with as they presented themselves. Some administrators explainedthat by undertaking a staggered schedule of ongoing preventive maintenance as part of the operatingbudget, they minimized the need for extensive repairs to decaying buildings in any one year.
A substantial proportion of schools that rented space were responsiblefor maintaining the
property and making capital improvements. Severaladministrators expressed some resentment
over the fact that they bore much of the costfor capital improvements that they could not retain,
but which were necessary to maintain the safety and aesthetics of theschool building.
Among schools that were renting or occupying space provided by areligious sponsor,
about half shared the cost of major repairs with .the sponsor; in-the otherhalf, the sponsoring
congregation was responsible for major repairs.
Reserve Funds for Future Acquisition or Construction
In addition to setting aside funds for plant renovations, a numberof schools set aside
funds for future building purchases or construction. For the most part,capital campaigns were
quite separate from regular operating budgets. However, someschools transferred funds annually
from the operating budget to some type of special building or reservefund.In some cases, the
transfer was a budgeted amount; in other cases, it was theend-of-the-year surplus of revenues over expenses. Some schools hadspecific plans for how to spend the capital funds, while others were saving money for a yet vaguelydefined future acquisition or construction project.
Five of the 28 schools in our sample spoke of plans to moveinto a new space in the future. Two of these schools were leasing space from county orcity agencies and were concerned that the lease might not renewed on favorable terms.Each of these schools transferred some funds from operating expenses into a building or moving expensesfund each year, although neither had specific plans, nor expected to movefor at least five more years. One of these. schools was a relatively new school that had been in threedifferent buildings in its first ten years of existence. Another new school, housed in churchessince its establishment in 1987, had been looking for eight years for an appropriate building to housethe school. The school had recently put a contract on a piece of land and hired apart-time development staff person to conduct a three-year campaign to raise funds for the land and buildingconstruction. Salaries and expenses for development were the only expenses in the school's currentbudget that related to the future acquisition and construction. A fourth school, renting spacefrom a private landlord, was transferring funds from operating expenses to a reserve fund,but had no plans more definite than
"buying a building one day." Finally, the fifth -school wasplanning to expand into the neighboring church building once construction was completed on a newsanctuary across the road.
In this fundamentalist school, the expansion of school space was aby-product of a construction project dictated by the needs of the congregation as awhole.
A number of administrators expressed concerns to theinterviewer about the difficulty in finding adequate space.The greatest concerns were voiced by administratorsleasing space from county and city school districts and byrelatively new schools that were outgrowing the capacity of the church facilities where they were initiallylocated. We do not know the extent to which
III-37 94 scarcity of adequate space is a common problem for private schools nationwide, or a local problem of the metropolitan Washington, DC area.
Exclusion of Capital Expenditures and Rental Payments from Operating
Expenditures
Capital expenditures are excluded from current operating expenditures in the NPEFSand the IPEDS finance survey. Rental expenditures are included in the NPEFSdefinition of current operating expenditures, but are minimal in most public schools. We excludedboth capital expenditures and rental payments from our definition of current operating expenditures toincrease the comparability between private and public school expenditures. This definitionalso made it easier to compare expenditures across renters, owners, and beneficiaries of free space.Plant maintenance costs, however, were considered to be part of the ongoing operating expendituresof private schools.
Plant Maintenance
Plant maintenance activities vary considerably depending upon the size and occupancy arrangements of school buildings and grounds. One business manager comparedthe plant management of his boarding school with 70 different -buildings on -campus toadministration of a small city. At another extreme, a church-sponsored school used parent volunteers called"room fathers" to re-arrange classrooms every Sunday night for the school week, and a schoolrenting space from an unaffiliated synagogue turned thetwice-a-week arrangement of furniture into a cooperative classroom activity. The teacher of the oldest students noted that her class wasproud of its ability to make the necessary adjustments in just nine minutes.
The most common maintenance activities across different schools were custodialservices and utilities. Among the 28 schools interviewed, there were 30 facility arrangements becauseof multiple campuses. Five schools received custodial services and utilities as part of their rental
III-38 95 agreements, including four schools renting from churches or synagogues.An additional six schools used church or synagogue custodians. Three of these schoolsreceived custodial services
(as well as rent and utilities) at no cost, one school made a modest contribution($100 per month) for custodial services and utilities, and two schools paid a proportional shareof the custodial salary and the utilities.
Under the remaining 17 arrangements, the school paid the full cost ofcustodial services directly, either through salaried janitors or purchased custodial services. The useof salaried custodians appeared slightly more common than the use of contracted services.Schools using salaried custodians typically had an additional budget line-item for custodial orcleaning supplies.
One of these 17 schools received utilities as part of its rent; the remaining 16 paidfor utilities out of their operating budgets.Utilities were generally a separate category in the budget, or a line- item within plant costs.
One administrator whose school had received free utilities and custodial services from a sponsoring church noted that he was going to record these expenditures in the school'sfinancial statements for the following year. The value of the subsidy was easilycalculated from the church's accounting records, which had tracked the -school's use of custodial services,electricity, gas, etc. for many years. By including theexpenditures in the budget, (and forgiving the payment of them if the school could not operate in the black), he hoped to make parents more awareof the church support of the school. (Rent-free space and the donated time of churchstaff and congregational members would continue to remain as hidden subsidies).
Many schools incurred other -types of plant maintenance expenditures. A numberof schools had maintenance staff and supplies, in addition to custodial services.Others had grounds- keeping staff and supplies. Contracted services were sometimes used in placeof salaried staff for buildings and grounds maintenance, and quite frequently used for specific typesof services.
III-39 96 Contracted services covered a wide range of activities, including trashremoval, security, pest control, snow removal, dead tree removal, alarm systems, water testing,and fire extinguisher checks.
Analysis of Plant Expenditures
Facility rental and acquisition costs were excluded from current operatingexpenditures in our analysis, but add significantly toschools' total costs. Among the ten schools in our sub- sample, four schools occupied rent-free space owned by their sponsoringchurch, synagogue or national religious association, five schools made rental payments that averaged7 percent of current operating expenses, and three schools made payments ondebt incurred in property purchase or expansion that averaged 12 percent of current operatingexpenditures.6
Equipment expenditures averaged 2 percent of operating expenditures amongeight schools with identified equipment expenditures in their financial records. Two of theschools budgeted additional amounts of 3 to 7 percent of their operating expenditures for building renovations.One of these schools also transferred funds equal to about 1 percent of its operatingbudget to a future building fund.
Expenditures for plant maintenance,- such as custodial salaries,-supplies or contracted
services, utilities, groundskeeping expenses, etc., accounted for 6 percent of currentoperating
expenditures across the eight day schools with detailed financial records. Maintenance costs
ranged from less than 1 percent in two schools for which space, utilities and custodialsalaries
were provided by the church to 12 percent in aschool with salaried custodians. Plant
maintenance costs were considerably higher in a boarding school that submittedpartial budgetary
data -- close to 20 percent of operating expenditures.
6Two of the ten schools made both rental and mortgage payments.
9r Other Services
Instruction, administration and plant maintenance are essentialfunctions for the operation of a private school. Other functions, discussed in this chapter, arefound in some private schools, but not others. Such services include transportation services,food service, residential services, financial aid, and extended day and summer programs.
Transportation
Among the 28 schools in the focus groups and sitevisits,. one-fourth (7 schools) provided transportation services to and from school and three-fourths (21schools) did not.
Schools with Daily Transportation Services
Among the seven schools with daily transportation services,four provided the services directly, two schools both special education schools used public school busses, and one school benefitted from bus service provided by a local military base.The four schools providing bus services included a proprietary school, a conservativeChristian school, a Seventh-Day
Adventist school, and a combined preschool and elementary school.The general model was to provide transportation services to less than one-fourth of thestudent body and to charge transportation fees that covered the expenses of the transportationservice. One of the four schools was planning to end transportation services in the coming yearbecause of cost concerns.
The high cost of transportation service had been mentioned byseveral school administrators that did not provide services, including two that hadcancelled transportation services within the past few years. One of these administratorssaid that transportation costs had begun to equal tuition costs, and so he had cancelledtransportation services, even though his
fundamentalist church owned a number of vans and busses for use onSunday mornings.
Over one-third of the students in a small religious schoolin Virginia were bussed in from
a military base in the District ofColumbia. The chair of the church education committee, a
III-41 98 military officer himself, explained that his base provided busservice to a number of private schools, in part because of dissatisfaction with theDistrict of Columbia's public schools. Free bus-service was provided to any private school that enrolled atleast 30 students and maintaining that enrollment was essential to thesurvival of his school.
Schools Without Daily Transportation Services
Parents were responsible for student transportationin three-fourth of the schools represented in the focus groups and site visits. Oneadministrator mentioned that parents drove from as far as 50 miles away to bring children to herreligious school. Some administrators spent time in coordinating parent car-pools. In addition, teachersand administrators often played a role in overseeing the safety of the school parking lot duringarrival and dismissal of the children.
A number of administrators in schools without dailytransportation services mentioned that they did provide transportation services for field trips andsporting events. Several schools owned a school van, which was drivenby the maintenance worker, the administrator, teachers, or
coaches. Other schools contracted with bus services for studenttransportation to special events.
Food Service
Private schools had a variety of arrangements.forfoodservice. In a few schools,
principally boarding schools, meals were available to all studentsand meal fees were part of the
overall tuition. A more common arrangement was for schools toprovide students with the option
of purchasing meals. Over half the schools in our sampledid not provide any meals, but relied
on students bringing bag lunches. In someschools, the students' bag lunches were supplemented
by school-provided milk, Thursday pizza days, or theoption to purchase some vended items or
meals.
Schools that offered meal service to some or alltheir students generally contracted with a
meal service vendor, although some had their own cafeteriaswith salaried employees.In some
B1-42 schools with contracted meal services, the school collected the lunch fees andpaid the contractor, with the funds recorded on both the income and expense sides ofthe financial statements. In other schools, the fees were paid directly to the vendor, withoutaffecting school revenues or expenses. In such cases, there might be nodirect meal service expenditures in the school financial records. There might, however, be revenues based on a percentageof the contractor's sales, or indirect costs, including utilities and custodial servicesfor the lunch room, as well as the time spent by school employees in collecting lunch orders andfees and distributing the food. In one school we visited, the principal's secretary wasresponsible for collecting lunch orders and money; in another school, our interviewwith the principal was interrupted while the principal went to the door to meet the pizza man.
Regardless of the type of meal service, schools generally had to make arrangements toset up, supervise, and clean the lunch room.A few schools used parent volunteers for this task, and one school paid a mother to work part-timein the lunch room. In most other schools, supervision of lunch appeared to be part of the regular responsibilities of teaching andadministrative staff.
Only one school participated in the National School Lunch program. Threeother school administrators mentioned that their school had participated- in the-past.- Thebusiness manager of the participating school, a special education school, explained that a largeproportion of the students in his school were low-income students, who were eligible forhigher lunch subsidies than high-income students.
Residential Services
Because our sample of 28 schools included only two boardingschools, we did not collect
much information about residential services. We did ask thebusiness manager of each boarding
school whether he could estimate expenditures for residential services.Both managers had a
rough estimate of the ratio of residential service expenditures tototal expenditures, based on
111-43 100 calculations made eight to ten years ago. In one school, boarding expenditures were estimated to be 40 percent of total expenditures. This estimate had been useful to parents several years ago when tax laws permitted parents to claim boarding costs for children less than 13 asdependent care expenses.It was still used by some embassies and state departments. The manager also mentioned his personal interest in calculating the non-residential share to compareit to tuition charged by select day schools in the area.
Financial Aid
All but one of the schools in our sample provided at least some financial aid.Schools varied in whether they included financial aid in their calculations of operating expenses.This section describes the financial aid practices of schools in our sample and concludes with an explanation of why financial aid was excluded from our calculation of current operating expenses.
Financial Aid Practices
The amount budgeted for financial aid ranged considerably. A number of schools in our sample budgeted as much as 10 percent of gross tuition for financial aid. One religious school following this practice referred to the 10 percent figure as its tithe for financial aid. Another school set itself a 15 percent target. In contrast; one conservative-Christian school provided only one scholarship, the Founder's Scholarship, which accountedfor less than 0.01 percent of the total budget. The overall tuition fees in this school were relatively low, and so the school was affordable to students from a broad range of family incomes despite the lack of explicit financial
aid.
Several business managers spoke of the trade-offs involved in setting tuition fees and
financial aid levels. One business manager appeared apologetic that his school provided only5
percent of its operating budget for financial aid. He explained that hehad unsuccessfully
proposed to the nuns running his school that they raise tuition and use the additional revenues for
III-44
10.E increased financial aid to low-income students. The nunspreferred to meet their goal of "keeping the school affordable" by constraining the growth inoverall tuition levels. Many principals and business managers also spoke of the trade-off between theopposing goals of charging an affordable tuition to students and paying a livable wage to teachers.
In the parochial Catholic schools in our sample,financial aid was provided at the archdiocesan level. Needy students applied for fundsprovided by the archdiocese. In one
interview with a parish administrator, the term "financialassistance" caused some confusion,
because the administrator interpreted our questions torefer to financial assistance from the
archdiocese to the school, rather than aid to students.
One of the fundamentalist schools in our sample haddevised a creative way to offer
financial relief to some of its needy students. On occasion,the principal sat down with a high
school student whose family was having difficulty meetingits tuition payments and set up a
schedule for the student to "work off" part of the tuitionby working a certain number of hours in
the school at minimum wage.
One of the special education schools in our sample did notprovide any financial aid
because tuition were paid by the public school districts andthe. state. The other special education
school did provide financial aid, which helped pay forfamily counselling services supplementing
the publicly-funded educational program.
Exclusion of Financial Aid From Operating Expenditures
Financial aid was treated as an expenditure in some schoolsand as a reduction in income
in other schools. Among the 20 schools explainingtheir treatment of financial aid, eight treated
scholarships as an expenditure, nine recorded financial aid onthe income side of the ledger, and
three had both earmarked revenues and budgetedexpenditures for financial aid.
111-45 102 Most NAIS schools recorded expenditures for financial aid, followingthe NAIS accounting practices. Under the NAIS guidelines, schools define totaltuition as equal to the product of enrollment and full tuition charges; financial aid is reflected onthe expense side of the ledger. Administrators classifying financial aid as an expenditure argued thatsuch treatment is necessary to show their board members the full rangeof expenditures that need to be covered by tuition and other forms of revenues.
As analysts interested in comparing expenditures between schools,however, we argue that financial aid should not be treated as an expenditure. Imagine two schoolswith 100 students and total expenditures of $300,000, without financial aid. Both schoolsspend $200,000, or 67 percent of expenditures, on instruction. The first school collects $300,000 by charging$3,000 in tuition
to all students. The second school collects $300,000 by charging$3,333.33 in tuition to 90
students, and providing full scholarships to 10 students. Under NAIS accountingpractices, the
second school would report total tuition of $333,333 (tuition of $3,333.33 multipliedby
enrollment of 100 students) and total expenditures of $333,333 ($300,000 in regularoperating
expenditure, plus $33,333 in scholarships for the 10 students). Under this accountingpractice,
instructional expenditures would appear to be 60 percent- of total expenditures($200,000 out of
$333,333). Under our treatment of financial aid, the second school would report total tuition of
$300,000 ($333,333 in charges less the $33,333 in tuition assistance or forgone revenue) andtotal
expenditures of $300,000. Under our treatment, instructional expenditures are 67 percentof total
expenditures in both schools.
We found that a number of principals of small schools knew how much theirschool spent
on financial aid and also knew their school'soperating expenditures, but were unclear whether
their financial assistance added to their expenditures, were subtractedfrom their revenues, or fell
on both sides of the ledger. This confusion amongadministrators highlights the need to adopt a
111-46 103 consistent method of treating financial aid when collectingand analyzing private school expenditure data.
Extended Day and Summer Programs
Extended day programs and summer programs were found in manyof the schools in our focus groups and site visits. Among the 28 schools in ourfocus groups and site visits, 16 had extended day programs and 12 did not. Half the schools(14 schools) reported summer programs, including day camps, sports camps, computer camps, drama programs, summerschools, and in one special education school, thecontinuation of a 12-month educational program.
Identification of Extended Day and Summer Program Expenditures
We asked private school administrators whether they could reportspending on extended
day programs and summer programs separately from other schoolexpenditures. In most schools
with summer programs, such programs were a separate line-itemin their financial records. In
fact, one administrator viewed his summer school as such a separateactivity that he did not
include its financial activities in his summary financial reports tothe Board, although he did
classify it as part of the overall school budget in order to avoid paying anyunrelated business
income tax on summer school revenues. A number of-administrators did notinclude summer
camp activities at all in the schoolfinancial records. For example, several principals of religious
schools mentioned that their sponsoring church or synagogues offered a summer campthat was
financially and programmatically independent from the school.
Most administrators said that they also could report expendituresfor extended day
programs separately from other expenditures.In some school financial statements, cost estimates
for extended day programs included a pro-rated share of expendituresfor administration and plant
maintenance, because the administrators were interested incalculating the full costs of after-school
programs in order to set appropriateafter-school fees.In other schools, stated expenditures for
111-47 104 after school programs were limited to staff salaries, benefits and supplies, or,in some cases, simply staff salaries. One administrator did not track expendituresfor the extended day program in his accounting statements, but was reasonably sure thatafter-school program expenditures were roughly comparable to after-school program fees, which were clearlyreported as a separate revenue in his financial statements, wasthe case in most statements. Several other administrators reported that the before- and after-school program, as well as pre-kindergarten programs, generated revenues that helped keep the school afloat.
Exclusion of Extended Day and Summer Programs from OperatingExpenditures
Our analysis excludes spending on extended day, summer schools and summer camps from our definition of private school operating expenditures. Spending onextended day programs is excluded from the National Public Education Finance Survey, on thegrounds that such activities are not an educational function. Spending on summer school programs,however, is included in NPEFS reports, in part because of the difficulty of splitting out suchspending from school-year spending by public school districts. Spending on summer school programscould be included in private school expenditures, although some distinctions might have to bemade between summer schools and summer camps.
Inclusion of Pre - kindergarten Expenditures
In addition to asking about extended day and summer programs, we askedprivate school administrators about pre-kindergarten programs, and the possibility of separatingpre-kindergarten
expenditures from elementary expenditures. Pre-kindergarten programs were found in 13 outof
the 22 schools with elementary school programs. In the vast majorityof these schools, the pre-
kindergarten programs were integrated with the upper grades, and so expenditurescould not be
disaggregated. Because of this integration of pre-kindergarten programs with elementary
programs, and because pre-kindergarten expenses areincluded in NPEFS data on public schools,
in-48 105 we concluded that pre-kindergartenexpenditures should be included in analyses of private school
expenditures and treated the same as expenditures for children in all other grades.However, the
integration of pre-kindergarten expenditures with expenditures for gradesk-12 may pose some
problems when reporting school expenditure data to the InternationalEducational Indicators
Project (INES) of the Organization for Economic Cooperation and Development(OECD).
Other Activities
Most activities conducted by private schools fall into one of theeleven functions described
above. We identified two types of activities that fall outsidethese eleven categories: spending on
auxiliary programs and spending on institution-wide support.
Some school financial statements included spending on auxiliary programsthat, like
extended day and summer programs, are not directly related to elementaryand secondary
education. Examples of such programs include a tennis club, a golf club, and achild care center
for children of teachers. In our preliminary analysis, we groupedexpenditures for such activities
with spending for extended day and summer programs and excludedthem from current operating
expenditures.
In addition, many school financial records had expenditures thatsupported overall school
operations, but did not fall into one of the eleven functions above. The mostprominent example
was dues and fees paid for membershipin professional or accrediting organizations. Such
expenses are classified as "other expenses" byNPEFS and "general expenses" by NAIS. Schools
also mentioned several other types of institution-wide expenses that areclassified as "general
expenses" by NAIS, including:liability insurance, bad debts, miscellaneous taxes, and
professional fees.
111-49 1 0 Analysis of Expenditures for Other Services
Seven day schools submitted budgets with sufficient detail toanalyze expenditures for services other than instruction-related activities, administration,and plant. Other services included in current operating expenditures averaged only 3 percent of schoolbudgets, including less than 1 percent for transportation, slightly over 1 percent forfood service, and less than 1 percent for
other expenditures for institution-wide support.The day schools had no expenditures for
residential services. Financial aid averaged 2 percent of currentoperating expenditures and
spending on extended day, summer, and other programs averaged4 percent.
The proportion spent on transportation, food service, andother institution-wide activities
ranged from 12 percent at a school providing both meals andtransportation to less than two
percent in the six other schools. Most schools had fewexpenditures, or none, for these functions.
Two schools reported transportation expenditures ranging from 4 percent in a school providing
daily transportation services to part of the student body to less than0.1 percent in a school with
maintenance expenditures for a school-owned vehicle used for fieldtrips. Four schools reported
food service expenditures, ranging from 7 percent in a school withfull meal service to less than 1
percent in three schools providing milk or snacks. All sevenschools had expenditures that were
classified as other "institution-wide" expenditures, but these expenditures wereminimal 1.5
percent or less of current operating expenditures.
Two of the seven schools reported financial aid as an expenditure,and five reported
expenditures for extended day, summer programs and other programsFinancial aid averaged 11
percent across the two schools with such expenditures.Expenditures for extended day and other
such programs averaged 5 percent across the five affectedschools.
111-50 1 0 7 Conclusion
Instruction is the primary function of private schools. Instruction-relatedactivities averaged 71 percent of current operating expenditures across eightschools submitting detailed financial records. Administrative expenditures averaged 21 percent. Plantmaintenance expenditures averaged 6 percent, and other services included in currentoperating expenditures
(principally transportation and food services) averaged 3 percent.
Although the data provided by the schools did not allow us toallocate instruction-related expenditures among instruction, instructional support services,and student support services, it appears that a large proportion of theseexpenditures were associated with direct instruction.
Salaries and benefits accounted for the majority of spending in boththe instruction-related and
administrative functions.
Plant-related spending varied significantly across the private schools in oursample, both in
terms of capital expenditures and rent and in terms ofongoing maintenance expenditures.
Budgetary data submitted by ten schools indicates that schools thatrented facilities paid an
additional 7 percent of their operating expenditures for such rental payments;schools with debt-
service paid an additional 12 percent.
Spending on transportation, food service, and other services wasminimal in many schools.
Many schools provided financial aid, but such assistance could bereported as a reduction in
income rather than an expenditure. Many schools also providedextended day and summer
programs. In most cases, schools wereable to separate spending for these activities from
spending on functions more directly related to elementary andsecondary education.
The 28 schools in our sample were diverse in terms ofschool activities, types of
expenditures, and accounting practices. Yet, for the most part,school administrators were able to
provide finance data on instruction-related activities,administration, plant, and other services.
III-51 108 The final question that we posed to the 28 administrators turnedfrom technical discussions of school activities and accounting issues to a more overarching question:would private school administrators be willing to participate in a national survey of privateschool expenditures?
Responses to this question are summarized in Chapter N. CHAPTER IV
REACTIONS OF ADMINISTRATORS TOFINANCE SURVEY
The success of a national survey on privateschool expenditures depends upon the willingness of private school administrators to answerquestions about their schools' finances. At the end of each focus group and site visitinterview, we asked participants to react to thedraft questionnaires used in the interviews. Administrators wereencouraged to share their perceptions of the costs and benefits of filling out suchquestionnaires. We asked them to be frank intelling us whether they would.respond to a mailed survey requesting information onprivate school finances.
This chapter summarizes the administrators'reactions to the idea of a national survey on private school finances.It discusses the administrators' initial resistance,their views on how the survey could benefit them, andtheir ideas on what steps could be taken tomaximize response rates.
Resistance to the Survey
The administrators' resistance to the surveyfell into two broad categories: reluctance to disclose private financial information to theFederal government; and reluctance to spend precious time filling out yet another survey. Mostadministrators expressed a variant of one of these two
themes, a few expressed both views, and afew expressed no reservations about completing a
survey.
Reluctance to Disclose Private Information tothe Federal Government
About half the principals and business managersvoiced some level of objection to the idea
of divulging financial data to the Federal government.Administrators were concerned that the
IV-1 110 data could be used against private schools. One fear was thatthe IRS might use the data to justify further taxes, such as taxing in-kind benefits. Another concern wasthat overzealous bureaucrats might use the data to increase regulations, "meddlewith" private schools, or even close down individual schools. Another danger was that localcompetitors might be able to use the information to gain an unfair economic advantage. Finally,advocates of public schools might find ways to use the data to promote the cause of public schools overthat of private schools.
Fears that the data would be misused were sometimes combinedwith a general distrust of
the Federal government. Some private school officialsexpressed resentment over past
government actions affecting private schools, includingthe Supreme Court's decisions on school
prayer, the overly prescriptive nature ofthe asbestos-removal legislation, and the lack of public
funding of private schools. In addition, some principals and business managersquestioned the
underlying motives of the government in collecting the data and expressedgeneral uneasiness
about "Big Brother" creating a national data base on private schoolexpenditures. One school
head noted that he would be less concerned by a survey by an independentresearch group than by
a survey by the government. Anotheradministrator asked why he should help the government
with its survey, when the government does nothing for- his school. .
Some people's concerns about the confidentiality of financial information werequite
separate from any feelings of mistrust of the government.One principal was frank in noting that
it would hurt his school's fundraising efforts if board memberssecured access to a completed
survey that showed that his school has a clear excessof income over expenditures. School
officials also were concerned about revealing any salary informationthat could be tied to an
individual teacher or administrator. Several participants expressed concernsabout competitor
access to confidential information. Inparticular, such concerns were voiced by several religious
schools that were competing for a fixed number of local studentsin their denomination.
IV-2 One principal said that although he would not report financialdata, he was sorry in some ways not to do so. He was proudof the school's financial health and confident that an examination of its financial record would reflect well on the schooland his own management skills. Although no administrators voiced the opposite view, weimagine that an administrator of a school that was failing financially, orthat had muddled financial statements, might be reluctant to record these facts on paper.
Although it is hard to generalize from a small sample, most of theadministrators expressing concerns about government access to private data wereprincipals of religious schools, particularly conservative Christian schools and Catholic schools.Concerns about confidentiality were also expressed by the one proprietaryschool administrator in our sample, although he felt he would have had similar concerns if asked to reveal budgetary dataof a not-for-profit school that he had led several years earlier. School and church secretaries alsoexpressed many concerns about the confidentiality of finance information and often warned usthat it would be impossible for administrators to answer any of our questions. Yet, in most cases,the administrator was much more forthcoming than the secretary had expected if we were able to speak directly with him or her and to explain our project and benignintentions.
Not all administrators were concerned about confidentiality issues. Oneschool board chairman explained that although his religious school wasideologically opposed to requesting government funding for its operations, it was not"anti-government." In fact, many parents were employees of the Federal government, and he was personally quitecomfortable with filling out government surveys. Several independent schooladministrators felt that their financial records were already quite public, because ofthe by-laws of their governing boards and their annual reporting to the IRS through the Form 990. (The Form 990is submitted annually by tax-exempt, non-profit agencies other than those institutions, such as religious schools, that are strongly
TV-3 affiliated with churches or synagogues). The administrators from the publicly-funded special education schools were the most accustomed to and comfortable with reporting of financial data to public authorities.
Skepticism of the Value of Spending Precious Time Filling Out Surveys
The largest source of resistance to the survey among independent schools, and some religious schools, was the view that filling out surveys is a time-consuming activity that yields little return benefit to the overworked school administrator.Some said they set surveys aside in a "to do later" pile, and generally do not uncover it again untilafter the deadline for submission has passed. Others forward the survey to the business manager, with a note to the effect that the manager may decide whether to make time for completing it. Some busyadministrators limit themselves to filling out those surveys required by law or as a condition of membership in an organization (such as the NAIS surveys). Others glance at a survey and make a quick judgment of whether their interest in the survey outweighs the time it will take to complete it.
Many principals and business managers complained about the number of surveys that already cross their desks. Business managers of independent schools felt particularly beleaguered.
Several managers noted that until a recent rebellion try-the-business-managers, three different financial surveys had been fielded by the NAIS and two local regional associations of independent schools (VAIS and AIS-GW). Administrators of religious schools also mentioned the existence of regional surveys that added to the number of surveys they were expected to complete.
Administrators questioned the need for an additional financial survey. Several business managers believed the NAIS survey met all their needs and they were not sure why it could not meet the government's needs also. Administrators of both non-sectarian and religious schools reported that they received useful information from their regional and national organizations. For example, a conservative Christian school compared itself to other members of Christian Schools
IV-4 113 International (CSI) in its region, a Catholic school receivedcomparative information from the archdiocese, and an alternative school learned aboutinnovative fund-raising techniques from a study by the National Coalition on CommunityAlternative Schools. A principal of a small school reported that the Washington Small Schools Associationcollected information selected by the administrators themselves, ranging from information on rental costs per squarefoot one year to information on director salaries another year.Given all these surveys, asked the administrators, what is the need or benefit of an additional survey onprivate school expenditures?
Potential Benefits from Survey
We discussed with principals, business managers, andparish administrators the potential benefits of a national finance survey, focussing on thosebenefits valued by the administrators themselves. Interestingly, despite their initial resistance,administrators could envision several ways that the survey could benefitthem. Benefits ranged from the direct benefit of receiving finance information that could help administrators in theirjobs to the indirect benefit of educating the public about private schools.
Information of Interest to Administrators
Some administrators were interested in comparing the totalexpenditures and tuition levels
of their schools to comparable schools. Others were moreinterested in learning more about
particular areas of school finance.
Several principals and business managers were excited by the prospectof a report that
would have sufficiently detailed cross-tabulation analyses toallow them to compare the
expenditures, tuition levels, and programs of their schools to"similar" schools. By similar
schools, administrators generally meant schools comparablein size and geographical region.
IV-5 114 Some school administrators also wereinterested in making comparisons by type and religious affiliation of school.
Two business managers from NAIS schools notedthe NAIS reports do not provide the detailed analyses and cross-tabulations that wouldbe of most use to administrators. They wondered if the Department of Education couldlink private school finance data with other economic and demographic data. For example,they thought it would be helpful to analyze school expenditures by regional cost of living data.
Several administrators expressed interest in specific areasof school finance. For example, two administrators were interested inlearning more about the flow of funds betweenchurches and schools. Part of this interest was in knowing howother schools address common problems in church/school relationships. Other principals and business managers wereinterested in the
expenditures for specific school functions (e.g., typical cost per squarefoot for space, average pay
per hour of a teacher's aide,median annual salary of development directors). Suchspecific
information could help the principal evaluate alternate facilitiesand set salaries for a new position.
One principal noted she had spent considerabletime telephoning around to other schools when
trying to figure out the appropriate pay per hour for a newteacher's aide. The most common area
of interest was in getting ideas for controlling costs orraising funds in order to keep tuition
affordable. As a new principal put it, administrators areinterested in getting ideas for "what
works" in other schools.
Administrators believed that information about expendituresin other schools could help
them evaluate their own school's budget and spending patterns.In addition, two principals
thought a national study would be useful in educatingtheir board members and parents on the
costs of running a good school. One principal questioned whether a "homogenized" report full of statistics couldprovide
the type of information that would be of real benefit toadministrators. He proposed an alternate
report consisting of in-depth case studies of 15 to 30schools. Such a study would be useful to
him because it would provide examples of the real budgetary challengesfaced by school
administrators as they try to provide quality services at affordable tuitionlevels. He could see
himself paying for a report or book of case studies because he could learnwhat to do to improve
his school. He even volunteered to be one of the case study schools though earlier in the
interview he had stated his categorical opposition to releasing any financialinformation in
response to a national survey.
Information that Educates the Public
Several principals and business managers believed that more accurateinformation about
private schools (and the differences among private schools) would inform andimprove the
ongoing debate about the role of private schools in American education.
O Some principals hoped that knowledge about private school finance andadministration
might improve the quality of education in this country. Some thought private schoolsmight have
a better chance of securing public funding ifthe public were more informed of their programs and
costs. For example, a special education administrator said hewould be willing to spend a whole
day providing financial data because he wanted to show people the cost-effectivenessof special
education in private schools compared with public schools. Other administratorshoped that
information about private schools could help enhance their reputation. Finally, others had a more
general interest in sharing information that might help the education communityin general.
Most of the principals were quite proud of their school and of the religious and/or
educational tradition with which they were affiliated. They wanted the public to know moreabout
their particular type of school, be it fundamentalist, progressive, Montessori, orspecial education.
IV-7 116 They were concerned that many people have a misguidedperception that the "average private school" is an expensive school serving rich children. Manyprincipals cautioned the interviewers repeatedly to recognize the diversity among different typesof private schools.
Ways to Interest Administrators in the Survey
School administrators suggested different steps that theDepartment of Education could take to reduce private school resistance to the finance surveyand increase its potential benefits.
These steps ranged from association endorsement of the survey totailoring the reports to meet private school interests.
Endorsement of Associations
As noted in Chapter III, all of the participants in the focus groupsand site visits were
connected with some regional or national association, as are four-fifthsof private schools
nationally. Almost everyone said that they would be more likely torespond to a survey if it was
endorsed by the head of their association. Some people felt associationendorsement was a
necessary but not sufficient condition to ensureparticipation. Others said it would make a big
difference. A few people said that a cover letter from their associationwould guarantee their
participation.
Participants felt that endorsement by associations would allay someof their suspicions
about the purpose and uses of government data collection.They would be more likely to make
time for the survey if it were accompanied by a letterfrom someone they respected who explained
how the data collection would benefit private schools. Somebusiness managers noted that a letter
would be most effective if it were signed by a regional rather than anational association leader,
because of their personal contacts with regional leaders.
IV-8 117 Several administrators advised that a cover letter was notsufficient preparation for an undertaking as sensitive as collecting finance data.They thought more advance communication would be needed, including articles in associationnewsletters, advance letters, and follow-up phone calls.
Our experience in recruiting principals andbusiness managers for the interviews confirmed the importance of association endorsement.People were much more comfortable participatingin our study if they knew the person(generally the head of a private school association)who had provided us with their name. People were hesitant to returnphone calls, let alone discuss
sensitive financial matters, when approached by aninterviewer who was completely unknown to
them. Association endorsement appearedparticularly important to school and parish secretaries,
many of whom screened callscarefully to guard administrators' time. Most Catholicschool
principals and parish administrators did not believethey had the authority to release financial
information without prior approval by the diocesansuperintendent.
Survey Design and Administration
Administrators were asked to react to aspects of surveydesign (e.g., length, format) and
administration (e.g., timing, periodicity) that might affecttheir willingness to spend- time on the
survey. Administrator comments aresummarized below; a fuller discussion of survey designand
administration is presented in Chapter V.
Survey Design. Respondents did not appear tooconcerned with the length of the draft
surveys, except to say it mightbe a little long. (Most respondents were shown 12 or15 page
drafts of Survey A, which is described in ChapterV and included in Appendix A). In general,
people said they preferred filling out short surveys.After flipping through a draft of Survey A,
one person estimated it would takeonly 30 minutes to complete and so was somethinghe would
fill out quite willingly. Another person noted shewould probably reject it because it was over her
IV-9 11 8 limit of 8 to 12 pages. On the other hand, one focus group participant said hewould be more likely to toss out a short survey.
Administrators raised concerns about the time needed to complete surveys that require writing down many dollar amounts. One respondent noted how checking boxes is much easier than writing in lots of numbers. Another principal thought that the people designing surveys are not aware of how time-consuming it is to tabulate figures acrosscategories, particularly in schools like hers, where the principal cannot pull up financial information on a personal computer.
Further, other administrators mentioned how surveys requesting exact dollarfigures heighten concerns about confidentiality and fears about makingmistakes that might lead to a government audit.
Administrators told us that they did not like filling out surveys that did not appear to apply to the particular situation of their school. For example, one principalregularly tosses out a survey on bilingual education because all the students in her schoolspeak English. In another example, a business manager expressed frustration at being asked to provide NAIS with salary information in
May, before salaries in his school are finalized. Several participants were pleased to see howthe draft surveys were sensitive to the variations in private school circumstances.
Survey Administration. Almost all administrators thought that late October or early
November would be the best time to fill out a finance survey. The hectic activity around school opening is over by late October, and the financial reviews of the preceding fiscal year are generally completed. The majority (four-fifths) of the 28 schools operated on a July to Junefiscal year. Most of the remaining schools had a fiscal year thatbegan on August 1; one school's fiscal
year began September 1, and one school's fiscal year beganJanuary 1. The NAIS finance survey is due around November 1, and NAIS business managers felt it preferable to do both surveys at
the same time. Participants at one focus group felt they would be more willing toparticipate in the survey if it were a one-time effort and not an expected annual burden.Other participants felt it important to collect data on trends.
Finally, some administrators noted how much easier it was to respond to aface-to-face interview than to fill out a paper survey. They suggested that the governmentconsider using face-to-face interviews for its survey. In addition to easing the burden onthe respondent, the personal interview provides an opportunity for the principal toexplain the financial information in the context of the whole school.
Making Reports Available to Respondents
Several principal and business managers noted how they are alwaysasked to fill out surveys, yet never receive any reports showingthe survey results. They would feel better about investing time in completing a survey if that investment resulted in atangible benefit a physical report. One business manager noted how NAIS members have access tothe data collected by NAIS. For example, NAIS will provide him with a listingof the salaries of admissions directors for 10 specific schools (without revealing which salaryis connected to which school), if his headmaster makes the request and pays a $50 fee. Access to suchinformation from a broader set of schools would be a strongincentive for him to participate in a national survey.
Another principal had a similar proposal. She suggested that survey respondentsbe provided with a list of specialized report topics that couldbe ordered. Statistics on topics of interest to her (e.g., costs of rental space, salaries of teacher aides) would be morevaluable than a lengthy report.
Other principals felt that guaranteed receipt of a free report would besufficient to entice them to spend some time in filling out a survey.
120 Conclusion
Four of the twenty-eight administrators (14 percent) saidthey definitely would fill out a mailed survey on private school finances if it landed ontheir desk. This willingness seemed largely determined by the personal attitude of theadministrator toward surveys. Three administrators (11 percent) were categorically opposed toproviding any financial data to the
Federal government, regardless of the survey format orform of appeals from private school associations. They felt that financial data were sensitiveand proprietary information that should not be shared with the Federal government.As stated in Chapter III, we placed calls to approximately 250 schools that declined to participate inthe focus group interviews. Although some of this negative response canbe explained by scheduling conflicts, difficulty ingetting to talk to the administrator directly, and insufficient time tofollow up with some administrators, it also suggests the existence of a substantial core ofadministrators who are not interested in participating in studies of school finance.
Among the 28 administrators who were interviewed, themajority (75 percent) were uncertain whether they would respond to a mailed survey onschool finance. They expressed varying degrees of reluctance to reveal school finances, aswell as concerns that their busy time
schedules would not permit participation in a project lackingtangible benefits. People's interest in
the project grew, however, as they began to envision waysthe collection of financial data could
provide benefits for private schools.
As discussed in Chapter V, ideas from private schoolofficials guided us in the design of
survey versions that impose minimalburdens on respondents. However, comments from
principals and business managers suggest that attention to surveydesign is not enough.
Administrators suggest that more "advance work" withassociations is needed to more clearly
articulate and publicize the purpose of the survey and to secureassociation endorsement.
IV-12 12J CHAPTER V
IMPLICATIONS FOR THE DESIGN OF A DATACOLLECTION STRATEGY
Based on the literature review, focus groups, andsite visits, we have reached three main conclusions about the collection of financial datafrom private schools. First, we are impressed by the extraordinary diversity among private schools.While private schools clearly share some features in common, they differ along manydimensions, including size, organizational structure and autonomy, administrative capacity, sourcesof revenue, and components of expenditures.
Although the literature reviewed in Chapter II led us to expectthat private schools would vary in many ways, the schools we observedin the focus groups and site visits were more diversethan we had anticipated.It is clear that the questionnaires we design must besensitive to the very wide variation among private schools.
Second, we are struck by the fascinating diversity inaccounting practices among private schools. As we reported in Chapter III, some schools especially larger schools and those affiliated with NAIS tend to share accounting categories and sophisticatedaccounting systems.
Others especially smaller schools and schools affiliated with churches have idiosyncratic systems that very from school to school. Inaddition, the administrative staff at the private schools we visited differ widely in their technical expertisein accounting matters. Some belong to professional associations of schoolbusiness officers and are quite conversant with the latest rulings of the Financial Accounting Standards Board(FASB) and the subtle implications of different approaches to the treatment of capitalexpenditures. Others have limited technical accounting experience and have invented systemsthat reflect local needs and traditions. Finally, as we indicated in Chapter IV, almost all of the private school administrators we contacted expressed an initial skepticism about the value to their schoolof collecting financial data. Nevertheless, once we began discussing the issues in more detail, mostbecame quite interested. During the scheduling of site visits, some administrators wouldcommit themselves only to a very brief meeting at the school (in some cases, shorter than ahalf hour). But, in almost every case, once we arrived at the school and began a conversation,the administrator found that the collection of financial data would in fact provide usefulinformation. The initial resistance (but ultimate interest) suggests that future work in developing afinancial data collection strategy must involve the close participation of privateschools.
In this concluding chapter, we begin by examining the implications of thediversity in private school organization and accounting practices for the collection offinancial data. The main problem that must be addressed is the development of an approach that makes itpossible to place data from schools operating in different contexts and employing different accountingpractices on
a common footing. Based on this discussion, wethen propose a framework laying out the major
categories of expenditures on which data should be collected. After describing theframework, we
then discuss three preliminary survey instruments that serve-to illustrate differentapproaches that
might be taken to data collection. Each of the three surveys draws on the basicframework we
propose, but each serves a somewhat different purposeand has a different combination of
strengths and weaknesses. Finally, we consider some of the steps that would berequired before
embarking on a national data collection effort.
Diversity and the Collection of Financial Data
The first fact that must be confronted in developing a surveyinstrument is that private
schools exhibit substantial variation along a number of dimensionsthat have important
V-2 123 implications for the nature of their expenditures and for the ways these expenditures areaccounted for and reported. Some private schools, for example, are essentially autonomousorganizations that operate as free-standing not-for-profits or proprietary institutions; whileothers are deeply interdependent, sharing revenues, expenditures, and services with closely-linked parent organizations (for example, local churches). Some private schools have considerablecapital assets and account for the depreciation of these assets in their annual statement ofchanges in financial position. Many other schools have few capital assets and treat occasionalcapital investments as expenditures similar in kind to expenditures for supplies and services. Someschools have substantial student financial aid programs which are considered expenditures and may accountfor as much as ten percent of the budget. Otherschools with a similar commitment to financial aid may record the aid as a reduction in revenue, andthus the financial aid does not appear as an expenditure. Some schools charge a textbook fee, which appears along with tuition as a sourceof revenue.For such schools, textbook purchases generally appear as a regular part ofthe operating budget. Other private schools sell textbooks through a school bookstore.In such schools, the net profit for the bookstore often appears as a revenue item, and textbookpurchases do not appear in financial records, even though textbooks may-be a required partof the educational program.
Beyond differences of this kind in the content of expenditures, private schools differ dramatically in the categories into which expenditures are divided. Small schoolsoften use categories corresponding to the major items for which checks are written: individualsalaries, payroll taxes, rent, utilities, insurance, telephone, and postage. Larger schools usuallyemploy
more complex systems, sometimes focusing on typesof activities (e.g., instruction or
administration); sometimes focusing on objects of expenditures (e.g., salaries or supplies);
V-3 124 sometimes on programs (e.g., expenditures for the mathematicsdepartment or the English department); and sometimes combining activities, objects, and programsin various ways.
The diversity among private schools makes the choice of a commonreporting framework challenging. This problem is further complicated if oneobjective of the data collection effort is to permit comparisons among public and private schools. Inaddition, recent changes in the FASB accounting standards for not-for-profit organizations, alongwith potential changes in the
Governmental Accounting Standards Board (GASB) standardsfor local government organizations, may lead to changes over the nextfew years in the ways many schools report revenuesand expenditures.
Thus, we conclude that any data collection effort, to besuccessful, must be based on the premise that schools vary in accounting practices. In otherwords, the data collection instruments must use an approach that makes it possible totranslate the data that are gathered into one or more forms that provide a commonstandard for cross-school comparison. This implies that data must be collected, not only on dollar amounts,but also on basic questions concerning both what is included in each school's financial statement and how the main componentsof expenditures are treated.
In accomplishing this goal, five issues are particularlycritical:the definition of "current
operating expenditures" (as distinct from capitalexpenditures); the role of "fund" accounting; the
treatment of items that can be viewed either asexpenditures or as reductions in income; the
definition of the core educational activities on whichexpenditure data should be included; and the
treatment of contributed services, supplies, andequipment. We discuss each of these in turn.
Current and capital expenditures. Ideally, the datacollected should make it possible to
estimate total expenditures for private elementary andsecondary schools in a fashion consistent
with current reporting for public schools and postsecondaryinstitutions. Traditionally, reporting
V-4 125 for both public elementary and secondary schools and postsecondaryinstitutions distinguishes two main types of expenditures: current operating expendituresand capital expenditures. At the public elementary and secondary level, current operatingexpenditures are defined as:
The expenditures for operating local public schools, excludingcapital outlay and interest on school debt. These expendituresinclude such items as salaries for school personnel, fixed charges, student transportation, school books and materials,and energy costs. Beginning in 1980-81, expenditures for State administration areexcluded. (Digest, 1995, p 490.)
At the postsecondary level, current-fund expenditures aredefined similarly, as:
Money spent to meet current operating costs, including salaries, wages,utilities, student services, public services, research libraries, scholarships andfellowships, auxiliary enterprises, hospitals, and independent operations. Excludes[student] loans, capital expenditures, and investments. (Digest, 1995, p 490.)
The distinction between current operating expenditures andcapital spending is partly
grounded in how operating and capital expenditures are typicallyfunded. For public elementary
and secondary schools, operating expenditures are generally supportedthrough regular operating
revenues, based on property taxes and stateand federal income taxes. Capital expenditures are
generally funded through bond issues. Similarly, for postsecondaryinstitutions, operating
expenditures are funded through tuition, state appropriations, andannual giving campaigns.
Capital spending is generally supported through separate capitalcampaigns.'
For-profit organizations ordinarily do not maintain an operatingexpenditure vs. capital
expenditure distinction.Instead, capital assets are depreciated over time to reflect the pace at
which the assets are utilized in production, and depreciation isincluded as a regular expense item
(i.e., along with expenses that are termed "current" or "operating" in thepublic and not-for-profit
sectors). FASB statement 93, issued in 1987, requires privatenot-for-profit organizations (but not
governmental organizations) to record depreciation as an expensein the same manner as for-profit
'This issue is given more attention below.
V-5 126 organizations, and not-for-profits must follow this ruling to obtain anunqualified audit. The
National Association of College and University Business Officers(NACUBO) has endorsed this ruling, and most private postsecondary institutions are movingtoward the inclusion of depreciation in their total expenses. Few private schools, however,currently include depreciation as an expense. Schools affiliatedwith the National Association of Independent Schools and some other private schools have traditionally included a Provision forPlant Replacement, Renewal, and
Special Maintenance (PPRRSM) in their budgets. While this is not,strictly speaking, depreciation, it is a form of capital spending, and it would not beincluded in the conventional definition of "operating expenditures."'
Given the changing accounting environment, it is not clear if thetraditional "operating expenditure vs. capital expenditure" distinction will remain a central elementof school finance reporting in the long run. But, for now, to maintain comparability betweenprivate school data collection and existing public school data collections, it is essential that anyproposed approach make it possible to estimate "current operating expenditures," with all formsof capital spending
(including direct spending on equipment, mortgage principal, mortgage interest,depreciation, and
PPRRSM) excluded. Thus, data collection instruments must explicitly-ask aboutvarious forms of capital spending and how they are treated, so they can be deducted if necessary toplace schools on a common footing.
In principle, it would be desirable to collect data on capital assets sodepreciation could be
calculated and included as an expense, as recommended byFASB.3 In fact, however, it appears
2The NAIS is in the process of revising its handbook to take several recent FASB rulings into account, and it is not yet clear whether it will maintain thePPRRSM approach, or recommend including depreciation instead.
3IPEDS collects data on the book value of physical plant and equipment that makes the calculation of depreciation possible, at least in principle.
V-6 127 that relatively few private schools maintain the necessary recordsof capital assets, and thus, at least for now, it is probably not practical to develop an estimateof expenditures for private schools that is fully consistent with the FASB depreciationstandards.4
One related complication that arises in comparing operatingexpenditures for public and private schools is the treatment of rent. Very few public schools rentfacilities. Since capital
spending is (by definition) excluded from operating expenditures,the cost of acquiring facilities is
not included as part of regularly reportedoperating expenditures for public schools. Many private
schools, however, rent their facilities. By the conventionaldefinition, rent is included as an
operating expenditure. Thus, as a consequence of differentapproaches to acquiring facilities in
the public and private sectors, the cost of facilities is includedin operating expenditures for many
private schools, but excluded for nearly all public schools. Wetherefore recommend that any
proposed private school data collection explicitly collect data on rent, sothat it can be included or
excluded from operating expenditures as desired, depending on the purposeof the analysis.
One final complication concerning the definition of "currentoperating expenditures" is a
consequence of the often subtle ways inwhich expenditures for capital, rent, and other current
operations are intertwined. In many schools, for example; rent-payments cover notonly the use
of facilities, but also utilities, routine maintenance, and custodialservices. Thus, if rent is
excluded from current operating expenditures in order to exclude the costof acquiring facilities,
one unintended side-effect is that, for someschools, items such as utilities may be excluded as
well.
Similar difficulties often arise in disentangling routinemaintenance, which is considered a
current operating expenditure, and non-routinemaintenance and improvement, which is a form of
4To calculate depreciation, a record of all assets must be available, with each assetrecorded at its "book value" or original purchase price.
V-7 123 capital expenditure. Some schools engage in building repair and improvements by making
relatively frequent but modest repairs. Such schools may classify items (such as replacement windows) as operating expenditures that by the conventional definition should be treated as capital
investments. Other schools engage in repair and improvement by making less frequent, larger
repairs. These schools may classify as capital investments items that by the conventional
definition should be treated as operating expenditures. These differences across schools in the
treatment of maintenance and capital improvements are verydifficult to overcome using survey
research methods; and it is unlikely that survey items can be constructed with enough precision to
eliminate all of the ambiguity involved in distinguishing current operations and capital investment.
Fund accounting. In addition to complications arising in the treatment of capital,
complications may also arise in the distinction among different types of "funds" maintained by
private schools. Traditionally, many private schools (like most not-for-profit organizations) have
practiced "fund" accounting, distinguishing, for example, operating, plant, and endowmentfunds.5
For private schools, revenues and expenditures traditionally have been reported separately for each
fund. Thus, for example, revenues and expenditures pertaining to a major gift campaign
traditionally are recorded in the endowment fund and do not appear in the operating budget.
FASB financial accounting standard number 117, issued in 1993, requires all not-for-
profits to prepare an overall-organization statement of financial position that distinguishes three
classes of net assets: unrestricted, temporarily restricted, and permanently restricted. These three
classes reflect the restrictions legally placed on gifts by donors. For example, a gift donated to be
used only for a school's endowment ordinarily would appear in the permanently restricted class of
assets. Private schools that adopt the new FASB standard are no longer required to employfund
5These are the three funds recommended by NAIS.
V-8 129 accounting methods, although they may, if they wish, continue to report revenuesand expenditures by fund in addition to reports on the three classes of assets.
NACUBO has instituted a set of guidelines to assist postsecondaryinstitutions in accommodating the new FASB rules, and many have begun to revisetheir reporting in a manner consistent with the new standards. Few private schools, however,have yet adopted the changes
FASB requires. NAIS is currently considering changes in itsHandbook in response to the new
FASB rules, but the changes are not yet complete. For many privateschools, FASB standard 117 is likely to have few consequences, because schools that lack capital assets(buildings, grounds, and an endowment) in all likelihood maintain only an operatingfund, and all funds are unrestricted in any case. We recommend consulting with NAIS,NACUBO, and other associations of private schools and private school business officers to determinethe extent to which data should be gathered on expenditures which schools do not currentlyconsider part of the "operating fund." Items that may appear an expenditure or as a loss of income.Some activities of private schools can be treated either as expenditures or as reductions in revenue.One important
example is financial aid. Many schools follow the -NAIS-practice ofbasing reported revenue on
the full tuition for all students. In these schools, financial aid appears as anexpenditure. Other
schools base reported revenue on the net tuition students pay (fulltuition less fmancial aid). For
these schools, fmancial aid does not appear as an expenditure. Sincefinancial aid can be a
substantial portion of the budget (in some schools exceeding tenpercent), the choice of
accounting practice can have a dramatic influence on reported totaloperating expenditures. We
recommend that data on the total amount spent on financial aidbe collected for all schools, along
with information on how financial aid' is treated in thebudget, so schools can be put on a
common footing.
V-9 130 Similar problems can arise in the treatment of auxiliary operations (for example, bookstores or cafeterias). Some schools that operate a bookstore report the net income for the store (revenues less expenditures) as a source of revenue in the operating budget. For such schools, the expenditures for the bookstore do not appear in reported operating expenditures.
Other schools report the total income generated by the bookstore as a source of revenue in the operating budget and include the bookstore's expenditures as regular operating expenditures.
While these differences in the treatment of auxiliary operations, if uncorrected, will create "noise" in reported operating expenditures, we believe the magnitude of the problem is likely to be less severe than the problem caused by financial aid. Thus we do not recommend collecting the detailed data that would be required to put the treatment of auxiliary operations on a fully common base.It may be desirable, however, to collect data on the manner in which each school treats these auxiliaries in their financial records (without asking for dollar amounts).
Core educational activities to be included. Another source of variation in reported expenses arises from the types of programs schools offer, as well as the ways these programs are treated in the operating budget. Some private schools focus their efforts entirely on providing academic programs during regular school hours for-the -traditional school-age population
(kindergarten through twelfth grade). Other schools operate pre-kindergarten, extended day, summer school, and summer camp programs. The expenditures associated with these programs are included in the reported operating expenditures for some schools and excluded for others.
Our evidence indicates that many schools offer pre-kindergarten programs, and most that do include the cost of these programs in their financial records. Disentangling expenditures for pre-kindergarten from those for K-12 operations would be quite difficult for many schools.
Furthermore, pre-kindergarten expenditures are included in the definition of current operating expenditures used in the national public school data collection. Thus, we recommend that pre- kindergarten be included in the definition of current operating expenditures forprivate schools as well. Schools should be asked to include pre-kindergarten expendituresin their totals, or to provide supplemental information on pre-kindergarten expenditures.
We recommend that the costs of extended day, summer school, and summer camp programs be excluded from current operatingexpenditures. Our evidence indicates that private schools generally account for such programs in a way that makesexcluding these expenditures relatively straightforward. Our recommendation concerning extended day programsis consistent with public school practice. But our recommendation to exclude summerschool contradicts standard public school practice of including summer school in thereporting of current operating expenditures. Nevertheless, given the wide variation in summer school programs acrossprivate schools and the difficulty of distinguishing true "summer school" from summer campsand other summer programs (for example, in the arts,athletics, or music), it seems desirable to exclude them. Contributed services, supplies, and equipment. Some schools make use of services, supplies, and equipment which are provided at no or below-market cost. Forexample, schools affiliated with local churches or synagogues often -make use-of facilities, custodialservices, utilities, and administrative and accounting support at below-market rates. Inaddition, many private schools, if not most, receive donated equipment, especially computers.Accounting for these contributed services, supplies, and equipment raises a number of perplexingquestions, both
about how such contributions should be valued, and how they are currentlytreated in private
school accounts.
For some contributed services, a reasonably standardaccounting practice is available. One
interesting example concerns the services of religious teachersand administrators in Catholic
schools. Religious teachers or administrators often receivesalaries lower than lay staff in similar "1132 roles. Currently, the National Catholic Education Association survey of secondaryschools asks schools to report the difference between the religious and lay salaries simultaneously as a source of revenue and as an expenditures. This attaches a plausible dollar value to thecontributed services provided.It may, however, be much harder to estimate the value of contributed services in other circumstances.
A few schools we visited recorded donated supplies and equipment in a similarfashion (as a simultaneous revenue and expenditure item).In many other schools, however, contributed services, supplies, and equipment do not appear in the revenue or expenditure statement.Indeed, many administrators had never tried to estimate thevalue of the donated services, supplies, and equipment until we posed the question in our interview.
FASB standard 116, issued in 1993, requires not-for-profits to record any substantial contributed services, supplies, and equipment in a manner similar to that used in the NCEA survey, and NACUBO has recommended the use ofthis practice in its advice to postsecondary institutions.It is not yet clear, however, whether the recommendation is likely to have a large effect on the reporting practices of private schools.
The reporting framework we propose includes-some measures of contributed services, supplies, and equipment; and the model questionnaires we discuss below include someitems concerning the types of contributed services, supplies, and equipment in use and the waysthese
items are dealt with in the school's expenditure statement. In addition, the questionnairesask
schools to estimate the dollar value of contributed equipment, but they do not requireschools to
place a dollar value on contributed supplies and services. We recommend thatthe inclusion of
dollar amounts for contributed services and supplies be pursued in more detail byNCES and the
representatives of private school associations before a final decision is reached onquestionnaire
design. V-12 133 A Proposed Framework
Based on the conceptual and practical issues raised in our focus groupsand site visits, we have developed a basic framework for the collection of privateschool financial data. The framework lays out the categories that should be used and the levelof detail at which expenditure data should be collected. The categories used to report expenditures vary acrossschools, and public and private traditions to some extent differ, in part due todifferences in the types of activities public and private schools support. Public schools, forexample, do not ordinarily require expenditure categories for financial aid, development, orstudent recruitment, while private schools generally do not require expenditure categories for district-leveladministration.
We begin our discussion of the proposed framework by reviewing the"function by object matrix" underlying the public school data collection. Then, we summarizethe reporting categories in use at the schools we visited. Next, we review the surveyNAIS employs to collect finance data from member schools. Although the survey is designed forNAIS member institutions, it appears that other surveys and school reporting practices frequentlydraw on the
NAIS form. Finally, we introduce our proposed framework and compareit to the NCES and
NAIS approaches.
The public school finance handbook, Financial Accounting for Local andState School
Systems (NCES, 1990), classifies expenditures using a two-dimensional)matrix, and this matrix
forms the basis of the National Public Education Finance Survey(NPEFS). The first dimension
of the public school matrix classifies expenses by the functions oractivities the expenditures
support. The functions included in the NPEFS are:
V-13 1 3 Instruction;
Support services:
student support services, instructional staff support services, general (district-level) administration, school administration, business administration, operation and maintenance of plant services, student transportation, central support services (research, development, and evaluation), and other;
Operation of non-instructional services:
food services, other enterprises, and community service operations; and
Facilities acquisition and construction services.
The second dimension of the matrix classifies expenses by natural categories or "objects." The main objects included in the NPEFS are:salaries, benefits, supplies, purchased services, and property/equipment.6
FASB standard 117 recommends that function by object reporting be used by all voluntary health and welfare organizations (Gross et al, p 192). Different types of not-for-profit organizations, of course, require different functional schemes. Appropriate functional categories are generally established by industry-wide business officer associations (such as NACUBO for postsecondary institutions). Currently, however, there is no single industry-wide association of business officers for private schools, and it is not clear whether such an association is likely to be established. Thus, any set of functions used in a national data collection form for private schools must be developed in such a way that they would encompass the diverse schemes already in use by private schools.
Based on our focus groups and site visits, we have concluded that many, if not most, private schools tend to give primary emphasis in their reporting of expenditures to classifying
6Although the form gathers data on equipment, expenditures for equipment are excluded from the total for operating expenditures.
V-14 135 expenditures by object. Most of the schools we visited distinguish at least three main objects: salaries, payroll taxes and benefits, and supplies. A few schools maintain a clear distinction between supplies (for example, paper products), purchased services (for example, telephone services), and equipment (instructional computers); but many other schools, if not most, lump services, purchased services, and most equipment together.
Our evidence indicates that many private schools do not explicitly classify expenditures by function. But many schools implicitly distinguish expenditures for three core functions: instruction, administration, and plant operations and maintenance. In addition, schools often report expenditures for functions or programs (such as financial aid) that are not easilyclassified as one of the three core functions.
Many schools employ reporting schemes that to some extent resemble the NAIS financial data collection form. The NAIS form is less detailed than the NPEFS, and it does not explicitly use a function by object framework. The form begins by asking about salaries, within a more-or-less functional framework. The form distinguishes salaries for the following types of personnel:teaching, instructional support, administration, plant/maintenance, secretarial, and "other" (including salaries for auxiliary operations such as food services, health services, and dormitories). These categories of personnel correspond to the main functions included in the
NPEFS (i.e., instruction, school administration, plant maintenance, and so forth), but they are somewhat less detailed, and the NAIS scheme does not incorporate a superordinate "support services" category.
In addition to salaries, the NAIS form distinguishes the following expenditures: benefits, student activities, financial aid, instruction, athletics, auxiliary operations, other services (such as summer programs), plant maintenance, PPRRSM,administrative, and general (i.e., insurance, rent,
V-15 1 3 6 and interest).' These categories cover most of the NPEFS functions, but the organization differs somewhat.
Based on our interviews and site visits, we have concluded that the public school set of functions and objects is too detailed for most private schools. In addition, several functions critical to private schools are not adequately reflected in the public school categories. The NAIS data collection form corresponds more closely than does the public school framework to the categories we observed in the schools we visited. But the NAIS system does not incorporate a full function by object matrix and thus does not permit an adequate comparison of public and private school expenditures.
Thus, we have developed a framework that combines some elements of the NPEFS and
NAIS forms. The framework we propose begins with the three core functions that almost any functional scheme is likely to contain: instruction, administration, and physical plant. A fourth category, "other services," includes activities that do not fall easily into the core set offunctions.8
Instruction-related activities:
Instruction, Instructional support services, and Student support services;
Administration;
Physical plant:
Capital expenditures and rent, and Plant maintenance; and
7Most of these categories explicitly ask for expenditures other than salaries and benefits. But, salaries and benefits are included in the reported expenditures for auxiliary operations and other services.
8Strictly speaking, a few items on the list may not be functions. (For example, extended day programs represents a program, not a function.) But, forsimplicity, we refer to the categories as functions, to maintain consistency with the NCES public school reporting forms.
V -16 137 Other services:
Transportation, Food services, Residential services, Financial aid, Extended day and summer programs, and Other activities.
Instruction-related activities include classroom instruction, as well as two activities classified as support services on the NPEFS form: instructional support (e.g., librarians)and student support (e.g., counselors). Our evidence indicates that many private schoolsdo not make a clear distinction between instruction andinstructional support; and many have very limited expenditures for formally-defined student support services, although such services often are provide as part of regular teaching or administrative roles.It thus may be advisable to consider collapsing the three functions under "instruction" into one or two categories.
The proposed administration category combines five administrative support services included on the NPEFS: general (district-level) administration, school administration, business
administration, central support services (research, development, and evaluation), andother.9 For most private schools, the administrative organization is not sufficiently differentiated to warrant
the detail included in the NPEFS.
Our proposed plant function includes two major subfunctions: plant acquisition and
construction (an NPEFS function) and plant maintenance (which corresponds to one of the NPEFS
support services). We group the two together because, for many schools, the mannerin which
facilities are acquired is closely connected to the way expenditures for maintenance arehandled.
Within plant acquisition and construction, we include rent, as well as all itemsconventionally
9Our proposed administration category includes two areas included on the NAIS form: administration and clerical activities.
V-17 138 classified as capital expenditures, including plant acquisition,equipment purchases and donated
equipment, building renovations, and reserve funds for futureacquisition or construction (i.e.,
PPRRSM). We recommend that specific questions be included oneach of these capital items
(along with rent), to make it possible to accommodate thequite varied treatment of capital
expenditures across schools.
Finally, our proposed "other services" category includesthree major auxiliary services
found in many private schools, transportation, food service,and residential services.It also
includes several other types of expenditures for whichinformation must be obtained to place
expenditures on a common footing: financial aid, extendedday, and summer programs.
With respect to objects, we recommend distinguishing threemain categories:salaries;
benefits; and supplies and purchased services. Our reviewof private school financial statements
in the schools we visited suggests that all records contain atleast some information on salaries,
benefits, and a combination of supplies, equipment, andpurchased services. Furthermore, many
schools maintain records that include separate salary items forthe core functional categories (such
as instruction, administration, andplant). Many schools also maintain records that include
separate materials items for core functions. Butfew school records distinguish systematically
between equipment and supplies and few include separate items for supplies and equipment
by function (for example, instructional supplies andinstructional equipment).
Despite the difficulty of doing so, it is essential to collect atleast some information on
spending on equipment, to insure that, insofar as possible,equipment expenditures are separated
from supplies so that they can excluded in the calculationof "operating expenditures" as
traditionally defined. But because schools differ radicallyin their treatment of equipment, and
because many schools do not clearly distinguish suppliesand equipment, we recommend that
private school data collection efforts not attempt toobtain data on equipment expenditures within
V-18 139 each functional category. Instead, we recommend that equipment be treated along with other capital acquisitions under the "plant" function. This solution preserves the full function by object matrix for operating expenditures (which excludes equipment), and it also permits an overall estimate of expenditures on equipment, which can be included in total expenditures (operating expenditures and capital);
In defining these functions and objects on a proposed survey form or in other materials, we recommend, insofar as possible, using terminology consistentwith the NAIS form. While fewer than five percent of all private schools belong to NAIS, elements of the NAIS reporting system are embedded in the surveys conducted by many state and regional associationsof private schools, and by using NAIS vocabulary and phrasing where relevant, we expect that at least some confusion can be avoided and respondents may be more likely to understand what is intended to fall in the various categories.
The framework we recommend has several benefits: insofar as possible, it permits the expenditures of private schools to be put on a common footing; it allows the development of estimates for "current operating expenditures" as traditionally defined for public schools and postsecondary institutions; it is sufficiently flexible to incorporate schools that have recently changed their accounting procedures to maintain consistency with the FASB standards, as well as schools that have not; and it permits reasonable comparisons of data collected for various types of private schools.
In the section that follows, we discuss three preliminary survey instruments we have developed that are consistent with this framework. The three surveys are designed to serve somewhat different purposes and would place somewhat different levels of burden on private school officials filling them out. Examples of Possible Data Collection Instruments
Appendices A, B, and C contain preliminary examples of three questionnairesdesigned to reflect the design principles discussed above. All three share the frameworkconsidered above, but they differ in emphasis or purpose. Versions A and B are designedprimarily to obtain valid data on total operating expenditures for private schools, that can be put on asufficiently common footing to permit both comparisons across private school sectors as well ascomparisons between public and private schools. Version B is in a sense a condensed formof version A. Version C is designed to collect much more detailed data using the full set offunction and object categories in our proposed framework.
In the sections below, we briefly describe the approach taken in each survey,along with the strengths and limitations of each.
Questionnaire Version A. This version of the survey asks respondents to reporttotal operating expenditures using the school's normal definitions as incorporated in theschool's financial records. In addition, to allow us to put the expenditure reports fromdifferent schools on a common footing, the questionnaire asksquestions about what is and is not included in the school's reported operating expenditures. In particular, it probes forsupplemental information in several areas that schools treat in very diverse ways: for example, financialaid, textbooks, rent and mortgage payments, and capital investment (including equipment, renovation,and new facilities). The questionnaire is designed to gather data on a few major componentsof expenditures (including instructional salaries, other salaries, benefits, andpayroll taxes), but it does not attempt to break down the expenditures into the full setof function and object categories in the framework we proposed above.
This version of the questionnaire appears to have a numberof important advantages. Our site visits indicate that this version is easy for schoolofficials to answer. Both headmasters and
V-20 141 business officers appear to understand the questions, which areposed in ordinary language rather than in formal accounting jargon.
In addition, the questionnaire is likely to produce a fairly accurateestimate of total operating expenditures, because it begins with the school'slocal total a value all schools appear to know and then probes for the information needed to adjust the total toinclude or exclude potentially problematic items.Furthermore, the questions appear to work reasonably well for both very small and very large schools. Finally, we believethat this form of the questionnaire is likely to be less threatening than Version C, because it is non-technicaland does not ask for much detail.
At the same time, version A has a number of clearweaknesses. For example, the questionnaire provides data on dollar amounts for only a few componentsof expenditures. In addition, the questionnaire is fairly long 16 pages.
Questionnaire Version B. This version is a condensed, four-page versionof questionnaire A. This version contain only those items absolutelyessential to obtain valid estimates of total expenditures that are comparable across schools.It collects dollar amounts only for total operating expenditures, financial aid; and rent or mortgage -payments.
Version B omits a number of sections of version A. For example,it does not ask about the value of services and supplies provided at no cost by otherorganizations and individuals, since these services and supplies ordinarily are not included in thefinancial statement, although
the recent FASB standards suggests that at least some of themshould appear as simultaneous
revenue and expenditure items.
Overall, version B shares many of the strengths of version A, and, atfour pages, it would
be short enough to include as part of SASS. At the same time,the questionnaire provides data for
V-21 142 only for total expenditures and a few otheritems not for specific components such as salaries or benefits. Questionnaire Version C. This version, although based on the sameframework as
Versions A and B, takes a different approach. We askrespondents to report expenditures in each of the categories included in our proposed framework,using definitions we provide.The survey is designed to collect data on the full set of functionsby object categories in our proposed framework, along with the additional informationnecessary to place schools on a common footing.
Version C has a number of clear strengths.First, by design, it will produce detailed information on many essential components of expenditures.This would permit more detailed and interesting analyses. In addition, the survey should permitmeaningful comparisons across schools at the component level. Finally, the surveyis relatively compact.
At the same time, the survey also has a number ofclear disadvantages. First, Version C would probably take longer for administrators to completethan Version A, and it may look more imposing, encouraging potential respondents to put itaside.1° Thus, the response rate to a survey like Version C may be lower than the response to VersionA or B. In addition, the survey may be difficult for some (if not many) private school administrators tofill out, especially schools that use accounting frameworks distantfrom those that underlie the NCES and NAIS reporting systems.
Also, while the category system based on the framework wehave devised will permit us to report expenditures for some of the maincomponents in the NCES Handbook (instructional
1°Version C has not yet been field-tested, and thus we are unsure how much more time it requires than Version A.
V-22 143 salaries, administrative salaries, operations and maintenance salaries), it will notprovide data on the full NCES function-by-object matrix.
Finally, schools may make errors in collapsing or subdividing line-itemsin their accounts to fit the categories we require. Furthermore, the "totalexpenditures" obtained by adding up the items we request will not necessarily agree with the school'sdefinition of "total expenditures."
(For example, the school may include some capital expenditures that weomit, or vice-versa.)
Hence, the school cannot "check its arithmetic" by totaling thereported components.
Summary. The three versions of the survey we have discussed are notintended as finished products. Although Version A is the most polished of thethree, all would require some additional field testing and refinement. The three versions are presentedhere to represent the variety of approaches that might be taken, all consistent with the basicframework we have proposed. At this stage, we believe it is premature to select one singleversion of the survey to develop further. Before a one (or more) surveys are selected for additionalwork, we believe several additional steps need to be taken, which we outline below.
Next Steps
Based on the work we have completed, we believe that four steps, inparticular, are needed to make a successful national data collection effort possible.First, we recommend that
NCES conduct a series of meetings with national and regional private schoolorganizations.
Second, we recommend that NCES prepare a set of materials that canbe widely distributed,
describing the rationale and purpose of the data collection effort. Third, werecommend that
NCES undertake an iterative series of reviews of alternative questionnaireforms, coupled with one
or more field tests, to arrive at the finalquestionnaire. Finally, more attention needs to be given
to potential sample designs. We describe eachof these steps briefly, below.
V-23 144 Meetings with private school oreanizations. The most important next step, webelieve, is a systematic effort to meet with national and regional privateschool organizations to develop the support needed to ensure a reasonable survey response rate.It is clear from our conversations with private school officials that, without the active endorsement of themajor private school associations, the project has little likelihood of success. Indeed,given the potentially threatening nature of a financial questionnaire, many people wehave talked with have suggested that the letter that accompanies the questionnaire should be written by(or at least signed by) the appropriate national and possibly regional associations.
One approach to gaining the support of various organizationswould be to participate in some of the regularly scheduled annual ormonthly meetings these organizations plan to hold over the coming year. This would make it possible to speak with a fairlybroad group of private school representatives and to share their concerns and incorporatetheir ideas before the questionnaire form and sample design is finalized. Topics to be discussed atthe proposed meetings would include the rationale for the project, draft questionnaires,and the advantages and disadvantages of various sampling plans.
Development of materials describine the rationale. of the planneddata collection. The effort to engage the support of the national associations, we believe,should place a strong emphasis on clarifying the rationale for the data collection effort.Most of the school officials we met asked at the outset, "What will my school gainfrom these data, if they are collected?" After
some discussion, most schools revealed aserious interest in knowing how their schools compared
with other schools similar in context, scale, region, and purpose.Most were not at all interested
in knowing the national average or other highly aggregatenational statistics. Furthermore, many
schools are clearly operating on a very tight budget, and tothe extent surveys of this sort can help
private schools as a group make a case foradditional support from parents, alumni, and other
V-24 145 donors, private schools are interested inparticipating. But the case for a national survey on private school finance expenditures has yet tobe made in a fully convincing fashion, and, to make the case, thought will need to be given to thekinds of reports that might be derived from the data to be collected, the kinds of purposesthe data would serve, the access that would bepermitted to school-level micro-data, and the potential linkagesbetween an NCES data-collection effort and
existing local and national surveys by private schoolorganizations.
Thus, we believe it is essential to develop a setof materials illustrating the kinds of
reports that could be generated based on theproposed surveys and describing the kinds ofbenefits
the data might provide for both individual privateschools and for associations representing
specific types of schools. In addition, these descriptivematerials should outline the safeguards
that would be implemented to protect the confidentialityof financial information.
Iterative review and pilot tests of Questionnaire forms.The three versions of the
questionnaire discussed above are intended as very preliminarymodels of the kinds of directions
future development efforts might take. The versions wehave developed will need to be modified
and new versions may need to be developed in the courseof future meetings with private school
representatives. Once this process has taken place, it will beessential to undertake a set of pilot
studies (possibly comparing the costs and benefits of severalalternative forms) prior to launching
a full data collection effort. Thesepilots might be undertaken in parallel with some of the
meetings with private school associations we recommendbe held over the coming year.
Consideration of alternative sampling plans. Differentrationales for a private school
finance data collection effort may require differentsampling plans." For some purposes (for
example, providing a reliable estimate of the totaloperating expenditures for private schools), a
"In addition, different rationales may require different modes of data collection,including mailed questionnaires, face-to-face interviews, and computer-assistedtelephone interviews.
V-25 146 relatively small stratified random sample may suffice. For other purposes(for example, obtaining reliable estimates of operating expenditures by sector, school size, region, andother key school context variables), a much larger sample may be necessary.It may be desirable to consider linked sampling plans, in which relatively thin data are collected in large sample,followed by more intense data collection in a smaller subsample of schools. Finally, it maybe possible to collect
some financial data in for all or some of theSASS sample of private schools. This design would
permit linking finance data with many school characteristics, includingcurriculum, staffing, and
organization.
V-26 147 REFERENCES
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American Montessori Society (1994). 1994 cash flow survey. NewYork: Author.
Association of Waldorf Schools of North America (1994).AWSNA financial survey. Fair Oaks, CA: Author.
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Ballou, D. & Podgursky, M. (1995a). How principals rate theirteachers: Implications for personnel policy in public and private schools. Unpublishedmanuscript, University of Massachusetts, Amherst.
Ballou, D. & Podgursky, M. (1995b). Chapter Five: Salaries, workingconditions and personnel policies in private schools. Unpublished manuscript.
Barbieri, R. (1992). Different forms of independent education. In P.R.Kane (Ed.), Independent schools, independent thinkers. San Francisco, CA: Jossey-Bass.
Benson, P. & McMillen, M.M. (1991). Private schools in the UnitedStates: A statistical profile, with comparisons to public schools (NCES 91-054). Washington,DC: U.S. Government Printing Office.
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Carper, J. C. (1991, May). An historical view of private schoolingin the United States.Paper presented at the Conference on the Dollars and Cents of PrivateSchools, Washington, DC.
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Chambers, J. (1995). The patterns of teacher compensation.Unpublished manuscript.
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R-1 148 Cibulka, J. G., O'Brien, T. J., & Zewe, D. (1982). Inner -city private elementary schools:A study. Milwaukee, WI: Marquette University Press.
Conway, G. E. (1994). Small scale and school culture:the experience of private schools. ERIC Digest. Charlestown, WV: Appalachia Educational Laboratory, Clearinghouse on Rural Education and Small Schools. (ERIC Document Reproduction No. ED 376 994).
Cookson, P. W. Jr. (1989). United States: Contours of continuity and controversyin private schools. In Walford, G. (Ed.) Private schools in ten countries. Policy andpractice. New York: Rout ledge.
Cooper, B. S. (1988). The changing universe of U.S. private schools. In James T. &Levin, J. (Eds.) Comparing public and private schools. New York: Falmer.
Cooper, B. S. (1994). Analyzing private school expenditures: A resource allocationmodel applied to independent schools. In Aitken, H. P. (Ed.) Access and affordability. Strategic financial perspectives for independent Schools. Washington, DC: National Association of Independent Schools.
Darling-Hammond, L. & Kirby, S. N. (1985). Tuition tax deductions and parent school choice.A case study of Minnesota. Santa Monica, CA: Rand.
Devins, N. E. (Ed.) (1989). Public values, private schools. New York: Falmer.
Encarnation, D. J. (1983). Public finance and regulation of nonpublic education: Retrospect and prospect. In James, T. & Levin, H. M. Public dollars for private schools.The case of tuition tax credits. Philadelphia: Temple University.
Erikson, D. A. (1986). Choice and private schools: Dynamics of supply and demand. In Levy, D.C. (Ed.) (1986). Private education. Studies in choice and public policy. New York: Oxford University Press.
Erikson, D. A. (1994). Insight and confusion in a private school study. Private School Monitors 15(4), 1-21.
Evangelical Lutheran Church in America (1993). 1992 Annual statistical report. Chicago,IL: Author.
Fowler, W. (1990). Financial accounting for local and state school systems, 1990. Washington, DC: U.S. Government Printing Office.
Garet, M., Chan, T., & Sherman, J.(1995). Estimates of expenditures for private K-12 schools (NCES Working Paper No. 95-17). Washington, DC: National Center for Education Statistics.
General Conference of Seventh-Day Adventists (1984). Academyaccounting manual report. Silver Spring, MD: Author.
R-2 149 General Conference of Seventh-Day Adventists (1995). North Americandivision office of education annual report, 1994. Silver Spring, MD: Author.
Gross, M. J., Larkin, R. F., Bruttomesso, R. S., & McNally, J. J.(1995). Financial and accounting guide for not-for-profit organizations. Fifth edition. NewYork: John Wiley and Sons, 1995.
Guerra, M. J. (1993). Dollars and sense: Catholic high schools and theirfinances. 1992. Washington, DC: National Catholic Education Association.
Guerra, M. J. (1995). Dollars and sense: Catholic high schools and theirfinances, 1994. Washington, DC: National Catholic Education Association.
Harris, J.C. (1995). The cost of Catholic parishes and schools. Unpublishedmanuscript.
Himmelfarb, H. S. (1993). Jewish day schools: Growth in an era ofreligious and educational decline. In Hunt, T.C. & Carper, J.C. (Eds.) Religious schools in theUnited States K-12. New York: Garland.
Hirschoff, M. U. (1986). Public policy toward private schools: A focus onparental choice. In Levy, D.C. (Ed.) (1986). Private education. Studies in choice and public policy.New York: Oxford University Press.
Internal Revenue Service (1995). Tax-exempt status for your organization(Publication 557). Washington, DC: U.S. Government Printing Office.
James, E. (1991, May) Private school finance and public policy in cross-culturalperspective. Paper presented at the Conference on the Dollars and Cents of Private Schools, Washington, DC.
Jewish Education Service of North America (1984). -Budgeting and finance inJewish day schools. New York: Author.
Kane, P.R. & Mason, J.B. (1992). The role of administrators. In P.R. Kane(Ed). Independent schools, independent thinkers. San Francisco, CA: Jossey-Bass.
Kea ley, R. J. (1990). United States Catholic elementary schools and theirfinances, 1989. Washington, DC: National Catholic Education Association.
Kea ley, R. J. (1992). United States Catholic elementary schools and theirfinances. 1991. Washington, DC: National Catholic Education Association.
Kea ley, R. J. (1994). Balance sheet for Catholic elementary schools:1993 income and expenses. Washington, DC: National Catholic Education Association.
Levy, D. C. (1991). Accountability and private-publiccomparisons. Education Policy, 5 (2), 193-199.
R-3 150 Lutheran Church-Missouri Synod (1994). School report for 1993-94.St. Louis, MO: Author.
McLaughlin, D. H., O'Donnell, C., & Ries, L. (1995). Private schools in the United States: A Statistical Profile. 1990-91 (NCES statistical analysis report, NCES 95-330). Washington, DC: U.S. Government Printing Office.
McLaughlin, D. H. & Wise, L. L. (1980). Nonpublic education of the nation's children. Technical report 9. Palo Alto, CA: American Institutes for Research.
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U.S. Bureau of the Census (1993). Public education finances: 1990-91 (series GF/91-10). Washington, DC: U.S. Government Printing Office. van Geel, T. & Crampton, F. E. (1991, May). The impact of law onprivate schools.Paper presented at the Conference on the Dollars and Cents of Private Schools, Washington, DC.
Vitullo-Martin, T. (1991, May). Funding patterns of private schools. Implications for growth or decline and effect of education choice plans. Paper presented at the conference on the Dollars and Cents of Private Schools, Washington, DC.
Westat, Inc. (1987). Private schools and private school teachers: Final report of the 1985-86 private school study. Washington, DC: U.S. Government Printing Office. APPENDICES A, B C, D Pe lavin,Research r American Institutes for Research 1000 Thomas Jefferson Street, N.W., Suite 400 Washington, D.C. 20007
DRAFT
May 1996
'Irma Cuumer CIPIERATIING 317111111KIIIVIRES
Please report your school's total current operating expendituresfor the 1994-95 school year, or the school's most recent fiscal year. Feelfree to round this figure, and all figures, to the nearest thousand.
The survey will also ask questions about services and materialsthat are not accounted for in operating expenditures, including services and materials that areprovided by parents, your school's sponsoring religiousorganization, and public programs (Federal, State, or local).
Total current operating expenditurest
Use your school's definition of current operating expenditures. Theremainder of this survey will ask questions regardingwhat is and what is not included in your definition of current operating expenditures (hereafter referred to asexpenditures reported in Q1).
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SCHOOLFINANCESURVEY
154 1.1sumucirinkT &Liam
2a. How much of the operating expenditures in Q1 were for salaries, payroll taxes, and benefits?
Total salaries
Total payroll taxes $
Total benefits
2b. Of the total salaries reported in question 2a, how much was spent on instructional (teaching) staff? (Please include full-time, part-time, and substitute staff, including art, music, P.E., etc).
Instructional salaries$
2c. Did the school staff last year include members of religious orders? Yes No
If yes, was their stipend lower than a lay person's salary? Yes No
2d. Were any of the salaries or benefits of the school teachers subsidized by an outside agency, such as the national denomination, or a philanthropic foundation, or the PTO? Yes No
If yes, was the subsidized portion of the salary included in 01? Yes No
2e. Did any of the administrative staff teach on a regular basis? Yes No
Did your total for instructional salaries in Q2(b) include a salary allocation to reflect the teaching workload of administrators? Yes No
SCHOOL SURVEY 155 2f. In what way(s) did the school provide any special servicesfor students with learning disabilities last year?(Check all that apply)
In operating expenditures: Not in operating expenditures:
f-t staff position volunteers
p-t staff position services paid by parent fees
contracted services govt. or public school staff
extra duty of teaching & administrative staff other paid staff (paid by religious sponsor, PTO, etc.)
no services provided Ilorur®m Tarmac=
3a. Did the operating expenditures in Q1 include costs fortextbooks? Yes 1:1 No
Ifyes, how weretextbooks paid for? (Check all that apply)
1=1 Books were covered in tuition. Students paid book/activities fee. Students purchased textbooks from a school bookstore, andthe bookstore's expenditures were included in Ql.
If Q1 included no expenditures for textbooks, or only minimalexpenditures, please explain:
Students purchased textbooks from a separate enterprise(i.e. school book store)and the enterprise's expenditures were not included in Ql. No textbooks (or very few textbooks) were purchased last year
3b. Did your school receive any textbooks or library booksthrough a Federal, state or local program, or from the public schools?
Yes No
3c. Did your school receive any donated textbooks orlibrary books from another source? Yes No
SCHOOLFINANCESURVEY 156 414 amainSUIPIESEr ANDacraucirmia, Emma
4a. In what way(s) did the school provide guidance counseling serviceslast year? (Check all that apply)
In operating expenditures: Not In operating expenditures:
ft staff position volunteers
p-t staff position services paid by parent fees
contracted services govt. or public school staff
extra duty of teaching & administrative staff other paid staff (paid by religious sponsor, PTO, etc.)
no services provided
4b. In what way(s) did the school provide student health services?(Check all that apply)
In operating expenditures: Not in operating expenditures:
ft staff position volunteers
D p-t staff position services paid by parent fees
contracted services govt. or public school staff
extra duty of teaching & administrative staff El other paid staff (paid by religious sponsor,PTO, etc.)
no services provided
4c. In what way(s) did the school provide staffing for a library or media center? (Check all that apply)
In operating expenditures: Not in operating expenditures:
f-t staff position volunteers
p-t staff position services paid by parent fees
contracted services govt. or public school staff
extra duty of teaching & administrative staff other paid staff (paid by religious sponsor, PTO, etc.)
no services provided
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SCHOOLHAMM MARV
157 AIDIZMISMATION
5a. Approximately how many paid staff were in your administrative office(s) last year? Please include administrators and support staff in headmaster'soffice, business office, development office, admissions and recruiting, etc.(Check one).
Less than 2 FTE staff 2-4 FTE staff 5-9 FTE staff 10 or more FTE staff
5b. Did any of the teaching staff carry significant administrativeresponsibilities and titles? Yes No
5c. Did any personnel in the church or synagogue spend at least 10 percent of their time on school administration? (Please include pastor, payroll clerk, Comptroller, Treasurer, etc). Yes No
5d. Did any parent(s) or member(s) of the congregation volunteer in the officefor four hours a week or more? Yes No
5e. Did you receive administrative support from a centralized office? (Please include assistance with curriculum, financial record-keeping, etc., from a diocese or other regional or national denominational or private school association). Yes No
If yes, please did you pay a membership fee to belong to the organization? Yes No
'PERIMSCHOOLMICE NOM 5f. How many additional personnel would be needed in your administrative office if you did not receive the administrative support from teachers, parents, members of the congregation, church personnel, and centralized office staff reported in questions 5b-5e? (Check one). None (checked no to 5b-5e).
Minimal (Checked yes to 5b,c,d,or e, but the administrative support provided is very limited). Less than one-half FTE administrative position.
About one FTE administrative position.
More than one FTE administrative position.
5g. Did parents and/or members of the congregation provide volunteer services other than administrative/office support? Yes No
If yes, please indicate where volunteer services were concentrated, and estimate significance of volunteer contributions.
Places where parents and other volunteers contributed services: (Check all that apply) Lunch service
Library
Substitute teachers
Teacher aides
1:1 Fund-raising events
Field trips
School and grounds maintenance
Other
Significance of volunteer services (Check one) School could not have operated without volunteer services. School was able to offer extra services (lunch service, field trips, etc.) because of volunteer services. School operations were not significantly affected by volunteer services.
*AWESCHOOL 159 5h. Did you contract out for any of the following financial services last year? (Check all that apply) None Payroll service Monthly accounting services Annual accounting services
Other
EITEIRIITS
6a. Did the school provide employees with health benefits last year? Yes 1:1 No
If yes, how were these benefits funded? (Please check all that apply) school paid entire or partial costs local or national religious association paid employee contributed for self employee contributed for family or high option
6b. Did the school provide employees with retirement benefits? Yes No
If yes, how were these benefits funded? (Please check all that apply) school paid entire or partial costs local or national religious association paid employee contributed
6c. Did your school provide any employees with subsidized housing? Yes No
If yes, was the cost of providing this housing included in theoperating expenditures reported in 01? Yes No
6d. Did your school provide any employees with tuition reductionsfor children? Yes No
SCHOOLFINANCE ca.amollAmeanas
7a. Did your school provide financial aid last year? Yes No
Some schools report financial aid as a reduction in revenues; other report it as an expenditure; and some schools use different accounting arrangements for different forms of financial aid. Answer "yes" to the question below only if financial aid is reported as an expenditure to the operating budget.
7b. Did the operating expenditures in Q1 include an expenditure for scholarships /financial aid? Yes No
If yes, how much financial aid was on the expense side of your Income and Expenses statement?
(rA TIMEEZPONTATION
8a. Did the operating expenditures in Q1 include expenditures for transportation services to and from school? Yes No
If yes, how many students were provided transportation last year? (Check one) less than one-fourth of student body one-fourth to three-fourths of student body three-fourths or more of student body
If no, please explain how transportation was provided. (Check one) No transportation provided Separate enterprise funded by parent fees, and the enterprise's expenditures were not included in Ql. Public school busses Church or synagogue provided transportation
SCHOOLFESNICE MOW 161 8b. Did the operating expenditures in Q1 include expenditures fortransportation services to athletic events or special events? Yes No
If yes, how were these transportation services provided?(Check all that apply) School-owned vehicle(s)
Contracted services
71,IRMO &WIC&
9a. Did the operating expenditures in Q1 includeexpenditures for food service? Yes No
If no, please explain how meals were provided: No meals provided by school. Meals were provided by a separate enterprise funded bystudent fees, and the enterprise's expenditures were not included in QI.
9b. Did you participate in the National School Lunchprogram? Yes No
Q11.6 lbsumaikrnia. &rams
10a. Did the operating expenditures in Q1 include expendituresfor boarding services? Yes No
If yes, please state approximate costs of boarding programs,if they can be determined. Difficult to determine
41920VATESCHOOLFINANCENOM aro 162 (P1111. IREEMIDIERGANZIEN, 111171ERIKED BAY, km Su AMER&EOM
lla. Did the current operating expenditures in Q1 include expendituresfor any of the following programs? Pre-Kindergarten Yes No If yes, please state approximate expenditures included in 01, if they canbe determined. Difficult to determine
Extended Day Yes No If yes, please state approximate expendituresincluded in 01, if they can be determined. 1:3 Difficult todetermine
Summer School Yes No If yes, please state approximate expendituresincluded in 01, if they can be determined. Difficult todetermine
Summer Camp Yes No If yes, please state approximate expendituresincluded in 01, if they can be determined. Difficult todetermine
Other auxiliary programs Yes No If yes, please state approximate expendituresincluded in 01, if they can be determined. Difficult to determine
If other programs; please describe:
12a. Was your school located on more than one campus last year? Yes El No
SCHOOL SURVEY 163 last 12b. Who owned the building(s) and grounds onwhich the school was located year? (Check all that apply) School Church, parish, synagogue or religious order Diocese or denominational organization (11 School and church jointly owned facilities Public local school district or government Private landlord Other
12c. Did your school pay rent on anyfacilities last year? Yes No
If yes, how much did your school spendlast year on the rent?
$ in full-market rent
$ in below market rent
12d. Did your school occupy buildingsprovided rent free by another organization (for example, church or synagogue)? Yes No
12e. Did the school make payments on aloan or bond for any school building or land? Yes No
If yes, how much did your schoolspend last year on loans and bonds?
$ in principal
$ in interest
Did the total operating expendituresreported, in Q1 include the principalpayments? Yes No
Did the total operating expendituresreported in Q1 include the interestpayments? Yes No
SCHOOLMIME SaMM7 Mu 164 Quo INANTbiliumrsikuuns: ILTIMILEMEA QuIRDIMIL, &EWES, AND 11110TITHANCS
Who paid for each of the following services?
School paid Provided free Included In School paid share of of charge by rent full cost costs landlord
Utilities
Custodial services
Routine maintenance (minor repairs)
Major repairs or renovations D
on& IID® &mums Anm)IEQUIDIDIZENT
14a. Did you receive non-cash gifts from any of the following sourceslast year? (Check all that apply) PTO
Church or Synagogue
Individual Parents
Public School
Alumni
Other Donors Grocer); receipts or similar promotion
AW/2 *AWE NNW&FINANCE 165 14b. Please estimate the value of donated supplies and equipment receivedlast year. < $5,000
$5,000$10,000
$10,000$20,000
$20,000$50,000
>$50,000
14c. Was the value of these donated supplies and equipment includedin total operating expenditures reported in Ql?
Yes No
(INS. CANTALILEMEDDIFTURIES
The following questions ask about expenditures for the acquisition andreplacement of equipment (for example, furniture, computers, and air conditioningsystems); the renovation and non-routine maintenance of current facilities; and theacquisition and construction of new facilities. Different schools classify these expendituresin different ways. For each question, please indicate theoption that comes closest to the system used at your school.
Do not include expenditures for the same equipment in more than onesection. For example, if an air conditioning system is included under "equipment," do notalso include it under "renovation of facilities."
Purchase of equipment
15a. Did your school purchase new equipment (furniture, computers,air conditioning systems, vans) or replace old equipment last year?
Yes No
If YES, how much did your school spend overall for equipmentlast year? (Please report the total cost of the equipment, not thedown payment or annual payment on a loan, if any, obtained to financethe equipment.)
5
SCHOOL S-UR VE 66 15b. Of the school's total expenditure on equipment last year, what amount was included in the operating expenditures reported in 91? Report both direct expenditures for equipment included in Q1 and any amount transferredfrom the operating fund to a special equipment fund. Do not include loan payments or depreciation. (Enter "0" if Q1 did not include expenditures forequipment.)
Renovation and non-routine maintenance of facilities
15c. Did your school engage in the renovation or non-routinemaintenance of facilities last year? Yes No
If YES, how much did your school spend overall for renovationand non-routine maintenance last year? (Please report the total cost of the renovation, notthe down payment or annual payment on a loan, if any, obtained tofinance the work.)
15d. Of the school's total expenditure on renovation and non-routinemaintenance last year, what amount was included in the operating expendituresreported in ili? Report both direct expenditures for renovation included in Q1 and any amount transferred from the operating fund to a "provisionfor plant renewal, replacement, and special maintenance" fund (PPRRSM). Do not includeloan payments or depreciation. (Enter "0" if Q1 did not includeexpenditures for renovation.)
Acquisition and construction of facilities
15e. Did your school acquire or construct new facilities last year? Yes No
If YES, how much did your school spend overall for theacquisition and construction of facilities last year? (Please report the total cost offife facilities, not the down payment or annual payment on aloan, if any, obtained to finance acquisition and construction. Include costs for facilitiescompleted last year, not for projects in progress.)
*ReamSCHOOLMB=SURVEY 167 15f. Of the school's total expenditure on the acquisition andconstruction of facilities last year, what amount was included in theoperating expenditures, reported in 01? Report both direct expenditures for theacquisition and construction of facilities included in Q1 and any amounttransferred from the operating fund to a special building fund. Do notinclude loan payments or depreciation. (Enter "0" if Q1 did not include expendituresfor the acquisition and construction of new facilities.)
Depreciation
15g. Did your school include depreciation of equipment orfacilities in the operating expenditures reported in Ql?
Yes 1::1 No
If YES, please report the depreciation expendituresincluded. (If you combine plant and equipment depreciation, please estimatethe expense for each.)
Depreciation of equipment: $ Depreciation of facilities:
Loan payments other than mortgage
15h. Other than mortgage payments, did your schoolinclude loan payments (or payments on other forms of long-term debt)in the operating expenditures reported in Ql? (Do not include mortgage paymentsreported in Q12). Yes No
If YES, please report the loan expenditures included.
Payment of loan principal included in Ql: $ Payment of loan interest included in 01:
SCHOOLFINANCE 188 Z1E IMMO
16a. Please report total operating income or revenues for the 1994-95 school year, or your school's most recent fiscal year.Please include income from all sources, except funds earmarked for a capital campaign.
Total operating income $
16b. Please report total income from tuition and registration fees paid by parents. Include fees for application, registration, and room and board. Do not include book and activity fees, if any.
Total tuition and registration $
Does this tuition figure include tuition for pre-kindergarten programs? Yes No
If yes, how much tuition was collected for pre-kindergarten programs?
Difficult to determine
16c. Please report total income from book, activity and program fees. Please include fees for books, supplies, and field trips. Also include fees for transportation, meal service, and milk programs if the expenditures for such activities were included in total operating expenditures reported in 01. Do not include fees for extended day programs or camps. Report 0 if there were no book, activity, or program fees last year.
Books/activities fees $
16d. Please report net income from any auxiliary programs, such as book stores, snack bars, student stores, or transportation service. Report the difference between gross income and gross expenditures, where known, also report any fees paid to the school by contractors such as food service vendors. Report 0 if there was no net income from auxiliary programs last year. Do not include extended day programs or camps.
Net income from auxiliary programs $
16e. Please report any income from local, State or Federal governments.
Public aid $
*MEM maim MINCE slaw 169 00 NANC
Pelavin Research Center American institutes for Research 1000 Thomas. Jefferson Street, N.W., Suite 400 Washington, D.C. 20007
DRAFT
May 1996
Qn. 'IrmaCIEEEENT CIPIUNTING Please report your school's total current operating expenditures for the 1994-95 school year, or the school's most recent fiscal year. Feel free to round this figure, and all figures, to the nearest thousand.
The survey will also ask questions about services and materials that are not accounted for in operating expenditures, including services and materials that are provided by parents, your school's sponsoring religious organization, and public programs(Federal, State, or local).
Total current operating expenditures t
Use your school's definition of current operating expenditures. The remainder of this survey will ask questions regarding what is and whatis not included in your definition of current operating expenditures (hereafter referred to as expendituresreported in 01).
BEST COPY AVAILABLE
SCHOOLFINANCEWNW 14 170 412. =VMSAMIN= llizatss, km au-MG= For each of the following categories of services or purchases, please indicate whether services were provided or purchases were made last year, and, if so, whether the expense of the service or purchase was included in Q1 or was "off-budget" (i.e. not in the operating expenses).
"Off-budget" services or purchases might be provided by donations, sponsoring organizations, parent-teacher organizations, parent fees that do not flow through operating budget, employee contributions, funding from capital fund or restricted gifts, public agency, etc.
Please check both "Costs in 01" and "Costs off -budget" if both funding sources were significant to the service or purchase, e.g., if the school and the employee make significant contributions to employee health benefits, or if half the library books were purchased and half were donated. Check "Costs in 01" if vast majority (more than 90 percent) of costs were in Q1 and check "costs off -budget" if vast majority (more than 90 percent) of costs were off-budget.
In 1994-95 or your school's most recent fiscal year, how did the school pay for
2a. Employee Health Benefits?
No Service Costs in Q1 Costs off-budget
2b. Employee Retirement Benefits?
No Service Costs in Q1 Costs off-budget
2c. Transportation to and from school?
No Service Costs in Q1 Costs off-budget
2d. Food service?
No Service Costs in Q1 Costs off -budget
2e. Extended Day Programs?
No Service Costs in Q1 Costs off-budget
2f. Summer Schools/Summer Camps/Summer Programs?
No Service Costs in Q1 Costs off -budget
SCHOOL LFERDeff EMMY 171 In 1994-95 or your school's most recent fiscal year, how did theschool pay for
2g. Textbooks?
No Purchases Costs in Q1 Costs off -budget
2h. Library books?
No Purchases Costs in Q1 Costs off -budget
2i. Equipment purchases?
No Purchases 1=1 Costs in Q1 Costs off-budget
2j. Renovation or non-routine maintenance of facilities?
No Purchases Costs in Q1 Costs off -budget
2k. New facilities?
No Purchases Costs in Q1 Costs off-budget a ®iL 3a. Did your school provide financial aid last year? Yes No
Some schools report financial aid as a reduction in revenues; other report it as an expenditure; and some schools use different accounting arrangements for different forms of financial aid. Answer "yes" to the question below only if financialaid is reported as an expenditure to the operating budget. 3b. Did the operating expenditures in Q1 include an expenditurefor scholarships/ financial aid? Yes No
If yes, how much financial aid was on the expense side of yourIncome and Expenses statement?
SCHOOLRIME =REY 172 (QC 'PRAM 4a. Who owned the building(s) and grounds on which school was located last year? (Check all that apply) School Church, parish, synagogue or religious order Diocese or denominational organization School and church jointly own facilities Public local school district or government
Private landlord Other
4b. Did your school pay rent on any facilities last year? Yes No
If yes, how much did your school spend last year on the rent?
in full-market rent
in below market rent
4c. Did your school occupy buildings provided rent free by another organization(for example, church or synagogue)? Yes No
4d. Did the school make payments on a loan or bond for any school building or land? Yes No
If yes, how much did your school spend last year on loans or bonds?
in principal
in interest
Did the total operating expenditures reported in 01 include the principal payments? I:1 Yes No
Did the total operating expenditures reported in Q1 include the interest payments? Yes No
MINES @MEV 173 DGAVE 00 11 AN®E
Pelavin Research Center American institutes for Research 1000 Thomas Jefferson Street, N.W., Suite 400 Washington, D.C. 20007
DRAFT
May 1996
BEST COPY AVAILABLE
SCHOOLFINANCESURIEY 0.4 174 1. EMPLOYEE SALARIES
For each of the following staff categories, please report total wages and salaries for allpaid employees of the school in fiscal year 1994-95 or your most recent fiscal year. Salaries to extended-day and summer programpersonnel should be reported separately, if possible, in item 4. Wages and salaries to employees of contractors should bereported in items 3a-3i.In cases where one individual holds responsibilities in more than one of the personnel categories presented, we encourage youto apportion the salary among the categories.If apportionment is not possible, report the total salary according to area of primary responsibility. Report 0 for any category without salaried personnel.
Employee Cash Salaries
a. a. Instructional salaries. Include salaries of all teachers,including music and art teachers, coaches, teacher aides, substitute teachers, and special education teachers. Include Sabbatical expenses. deem appropriate. $ Academic department heads may be regarded as teachers or administrators, as you librarians, counselors, b. b. Instructional support and student support salaries. Include salaries of nurses, chaplains, audiovisual staff, staff providing psychologicalservices, speech pathology services, $ etc.
c. c. Administrative salaries. Include salaries paid toschool heads, department and divisional heads, and the staff of the various administrative departments, including business, admissions,financial aid, and $ development. Include salaries paid to individuals who provide secretarial or clerical services.
d. d. Plant/maintenance salaries. Include salaries of custodians, engineers, and otherplant and grounds maintenance personnel, including the plant supervisor if the function is performed by an individual not $ reported as an administrator above.
e. e. Student transportation service salaries. Include salaries paid tobus drivers.
$
f. f. Food service salaries. Includes salaries paid to staff working in lunch rooms, dininghalls or snack bars. $
g. g. Residential service salaries. Include salaries paid tohousekeeping staff and dormitory parents.
$
h. h. Auxiliary service salaries. Include salaries paid to personnel staffing bookstore, student store, or other enterprises. $
Total salaries. Sum of a-h.
$
0,2 *KammSCHOOL SURVEY 175 2. EMPLOYEE BENEFITS
For each of the following staff categories, please report total expenditures on employee benefits and payroll taxes in fiscal year 1994-95 or your most recent fiscal year. Benefits and payroll taxes for extended day and summer programs personnel should be reported if possible.If benefits and payroll taxes cannot be reported by category, please report total. Report 0 for any category without benefits or payroll taxes.
Benefits and . Payroll taxes
a. a. Instructional salaries. Include salaries of all teachers, including music and art teachers, coaches, teacher aides, substitute teachers, and special education teachers. Include Sabbatical expenses. $ Academic department heads may be regarded as teachers or administrators, as you deem appropriate.
b. b. Instructional support and student support salaries. Include salaries of librarians, counselors, nurses, chaplains, audiovisual staff, staff providing psychological services, speech pathology. services, $ etc.
c. c. Administrative salaries. Include salaries paid to school heads, department and divisional heads, and the staff of the various administrative departments, including business, admissions, financial aid, and $ development. Include salaries paid to individuals who provide secretarial or clerical services.
d. d. Plant/maintenance salaries. Include salaries of custodians, engineers, and other plant and grounds maintenance personnel, including the plant supervisor if the function is performed by an individual not $ reported as an administrator above.
e. e. Student transportation service salaries. Include salaries paid to bus drivers.
$
f. f. Food service salaries. Includes salaries paid to staff working in lunch rooms, dining halls or snack bars.
g. g. Residential service salaries. Include salaries paid to housekeeping staff and dormitory parents.
$
h. h. Auxiliary.service salaries. Include salaries paid to personnel staffing bookstore, student store, or other enterprises. $
Total benefits and payroll taxes. Sum of a-h
$ SUPPLIES AND CONTRACTED SERVICES
For each of the following categories, please report supplies and contracted services in fiscal year 1994-95 or your most recent year. Exclude expenditures for extended-day programs, summer programs, rent and equipment to the extent possible. If your records do not permit you to separate expenditures into the categories we have provided, please provide your best estimate. Report 0 if no expenditures in category.
..Suppliesant Contracted Services
a. a. Instructional. Expenditures other than salaries, benefits, and equipment for academic departments and programs, including athletic and physical education programs. Include the expenditure of books, materials, $ supplies, and subscriptions. Include expenditures for student-related activities such as school newspaper, yearbook, school magazine, theater or student productions, assemblies and trips and excursions.
b. b. Instructional support and student support. Expenditures other than salaries, benefits, and equipment associated with library, counselling, student health services, chaplain, media center and psychological $ services, including contracted services. Also include support to teaching staff including staff development, and costs of attending conferences.
c. c. Administrative supplies and services. Please include all expenditures for supplies, telephone, stationery, printing, postage, equipment rentals, insurance other than plant-related insurance, contracted $ services, (including legal and accounting services), expenditures associated with governing board, expenditures associated with fund-raising events, and travel by administrators.
d. d. Plant operation and maintenance. Expenditures for electricity, fuel, maintenance materials, custodial supplies, contracted custodial and maintenance services, security services, and plant-related insurance. $
e. e. Student transportation. Expenditures for supplies and services, including vehicle insurance and repairs and contracted services. $
f. f. Food service. Expenditures for food and purchased food services.
g. g. Residential services. Expenditures for supplies and services, including contracted services.
$
h. h. Auxiliary services. Expenditures for school-based enterprises such as book store and student store.
$
i. i.Other expenditures. Include expenditures not attributable to any specific administrative department. Report expenditures for liability insurance, bad debts, miscellaneous taxes, and membership fees. Do not $ include equipment, rent or payments on principal or interest. Total supplies and services. Sum of a-i
$
'17 *CM=SCHOOLFINANCESURVEY 4. EXTENDED DAY AND SUMMER PROGRAMS
Other Programs
Extended day and summer programs. Expenditures for other programs, including salaries, benefits, and payroll taxes, such as summer school, camps, extended day programs, child care, summer conferences $ and workshops, and public services.
FINANCIAL AID
Financial Aid
Financial aid/tuition remission. Report that portion of financial aid that is accounted as a financial operations expenditure. Do not include tuition remissions that are reported as reductions in revenues. Do $ not include loans.
6. RENT MORTGAGE, AND OTHER LOAN PAYMENTS
Rent and Loan Payments
a. a. Rent. Include rental payments for land and buildings.
$
b. b. Principal payments on mortgage. Include principal payments on any long-term debt associated with school buildings or land. $
c. c.Interest payments on mortgage. Include interest payments on any long-term debt associated with school buildings or land. $
d. d. Principals on debt other than mortgage. Include principal payment on debt such as loans for vehicles. $
e. e. Interest payments on debt other than mortgage. Include interest payments on debt such as loans for vehicles. $
6.. Total rent and mortgage payments. Sum of a-e
$ 7. DEPRECIATION
Depreciation
a. a. Depreciation of equipment. Please report depreciation expenses if your school estimates depreciation expenses. Report 0 if your budget does not include depreciation. $
b. b. Depreciation of facilities. Please report depreciation expenses if your school estimates depreciation expenses. Report 0 if your budget does not include depreciation. $
8. TRANSFERS OUT OF OPERATING FUND
`Transfer
a a. PPRRSM. Please report any amount transferred from the operating fund to a "provision for plant renewal, replacement, and special maintenance" fund (pprrsm). $
b. b. Building funds. Please report any amounts transferred from the operating fund to a special building fund, including transfers of any surplus funds at the close for the year. $
*RolmSCHOOLFliANZE WV 179 9. CAPITAL EXPENDITURES
Please report capital expenditures for the acquisition and replacement of equipment; the renovation and non-routine maintenance of current facilities; and the acquisition and construction of new facilities.Different schools classify these expenditures in different ways. Please report expenditures under the category that seems most appropriate for your school.
Please report all capital expenditures under a, b, c, or d, without regard to whether some of these expenditures have already been accounted for in items 6-8. However, do not include expenditures for the same equipment in more than one category of item 9. For example, if an air conditioning system is included under "equipment," do not also include it under "renovation of facilities." Please report the total cost of the equipment, not the down payment or annual payment on a loan, if any, obtained to finance the equipment. Do not report depreciation. Report 0 if no capital expenditures in a category.
, Capitol Expenciltares
a. a. Equipment purchases. Please report purchases of new equipment and purchases to replace old equipment, including furniture, vehicles, computers and science laboratory equipment $
b. b. Equipment donations. Please report the value of donated equipment.If value is unknown, please provide rough estimate. $
c. c. Renovation or nonroutine maintenance. Please report the total cost of the renovation, not the down payment or annual payment on a loan, if any, obtained to finance the work. Include expenses for $ replacement or major repairs to heating and cooling equipment (if not included above), physical structure, or grounds.
d. d. Acquisition or construction of facilities. Please report the total cost of the facilities.Include costs for facilities completed last year, not for projects in progress. $
Total capital. Sum of a-d.
$
SCHOOLFINANCENOM CAD 160 10. INCOME
Please record the revenue received from each source for the 1994-95 fiscal year. Include only sources of revenue used to support current operations, not revenue received as part of capital campaigns. Report 0 if no income from a category.
Income
a. a. Tuition and fees. Fees revenue reported here should include application fees, instructional fees, and fines and assessments. Lunch and / or transportation fees for day students should be reported below 10b $ and 10c. These fees may be reported here if they are regularly included in day student tuitions and a separate accounting of them is not available.
b. b. Student Transportation Fees. Income from student transportation, unless transportation charges are regularly included in day tuitions and can not be reported separately. $
c. c. Food Service. Gross Income from cafeteria and snack bar.If lunch charges are regularly included in day student tuitions, they may be reported as tuition and fees income above. $
d. d. Income from other auxiliary services. Income from book store, student store, laundry, and other services provided to students. $_
e. e. Income from extended day and summer programs. Gross income from summer school, summer camps, extended-day and child care programs, summer conferences and workshops, and public services.. $
f. f. Endowment and investment income. Dividends and interest earned on short- and long-term investments and applied to school operations. $
g. g. Gifts, grants, and fundraising. Include gifts from parent-teacher organization. Gift and grant income used for current operations and programs. Include foundation grants and gifts from parent-teacher $ organization. Exclude capital gifts.
h. h. Cash subsidy from another organization. Include subsidies from church, synagogue, parish, diocese, religious community, national association. $
i. i.Aid from federal, state or local governments.
$
I. j.Net Income from affiliated enterprises. Net income from any enterprises operated by the school that are non-instructional and that operate with separate facilities.Include inns, thrift shops, working farms, $ and golf courses.
k. i.Other. All revenue amounts not classified elsewhere, such as incidental rental income and proceeds from the sale of equipment. Include transfers not reported in any other income category. $
Total income. Sum of a-k.
$
0.0 1i 4'kumirESCHOOL APPENDIX D
Schools in Focus Groups and Site Visits
School Administrator Date
Catholic Schools
Georgetown Visitation William Fisher, Jr., Business Manager Oct. 20, 1995 Holy Name School Father David Russell, Pastor Oct. 25, 1995 Oakcrest School Connie Angel Willis, Business Manager *Oct. 10, 1995 St. Anne's Academy Monsignor Await, Pastor -Oct. 23, 1995 St. Augustine Catholic School She lore Williams, Principal Nov. 6, 1995 St. Peters Interparish School Mary Randolph, Principal Oct. 10, 1995
Other Religious Schools
Annapolis Area Christian School Ron Whipple, Superintendent *Oct. 5, 1995 Berwyn Baptist School Ann Elizabeth Lbrat, Principal *Oct. 5, 1995 Dupont Park Adventist Leonard Hodges, School Treasurer *Oct. 5, 1995 Episcopal High School Richard Yarborough, Treasurer Nov. 7, 1995 Fairfax Baptist Temple Eigil Hansen, Jr., Minister of Education Oct. 26, 1995 Friends Community School Jane Manring, Director and Carol Kagan, Bookkeeper Nov. 14, 1995
Hebrew Day School Rabbi Peretz Hochbaum, Headmaster Nov. 17, 1995 Immanuel Lutheran School Keith Keck, Chair of School Board and Celinda Claxton, Nov. 10, 1995 Principal
Jewish Primary Day School Susan Koss, Director Oct. 19, 1995 National Christian Academy Dr. Fred Snowden, Administrator *Oct. 5, 1995 Oct. 30, 1995 Royal Christian Academy Greg Amos, Principal *Oct. 5, 1995 Sligo Adventist Elementary William Ruby, Principal *Oct. 5, 1995 St. Peters Lutheran School Norma Pilot-Peters, Principal *Oct. 5, 1995 Trinity Christian School James Beavers, Headmaster Oct. 24, 1995
Non-Sectarian Schools
Evergreen Montessori School Lydia Mosher, Interim Head and Page Dame, Business Nov. 22, 1995 Manager Foxcroft School Gary Welke, Business Manager *Oct. 17, 1995 Frost School Sean McLaughlin, Director *Oct. 17, 1995 Green Hedges School Pell Fender, Director of Development *Oct. 17, 1995 Hannah More Center, Inc. Wayne Roach, Business Manager Oct. 19, 1995 Maret School Don Mordecai, Assistant Head Nov. 6, 1995 New School of Northern Virginia, John Potter, Principal Nov. 2, 1995 Washington Waldorf School Gary Cannon, Business Manager Nov. 14, 1995
*Focus Group -Telephone Interview Only 182
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